TAXES 18-29, Indiana State Income Tax Withholding

Published: March 21, 2018
Effective: Pay Period 25, 2016

Summary

This tax bulletin is being updated to remove the number of pay periods in steps 4 and 8 and replace with the phrase "number of pay dates in the tax year," thereby preventing any confusion in future years. All other information in this bulletin remains the same.

No action on the part of the employee or the personnel office is necessary.

Tax Formula

State Abbreviation:	IN
State Tax Withholding State Code:	18
Acceptable Exemption Form:	WH-4
Basis for Withholding:	State Exemptions
Acceptable Exemption Data:	0/Number of Exemptions/Number of Additional Exemptions
TSP Deferred:	Yes
Special Coding:	Determine the Total Number Of Allowances field as follows: First Position − Enter 0 (zero). Second and Third Positions − Enter the number of exemptions claimed. Determine the Additional Exemptions Claimed field as follows: First and Second Positions − Enter the number of additional exemptions claimed on Line 5 of the WH-4. Valid values are 00 through 99. If no allowances are claimed, enter 00.

Withholding Formula (Effective Pay Period 25, 2016)

Subtract the biweekly Thrift Savings Plan contribution from the gross biweekly wages.
Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program, and flexible spending account − health care and dependent care deductions) from the amount computed in Step 1.
Add the taxable biweekly fringe benefits (i.e., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.
Determine the exemption allowance by applying the following guideline, and subtract this amount from the result of step 4:

Exemption Allowance = $1,000 x Number of Exemptions¹
^{1 Number of exemptions claimed for self, spouse, over age 65, blindness, and dependents.}
Determine the additional allowance by applying the following guideline, and subtract this amount from step 5 to compute the taxable income:

Additional Allowance = $1,500 x Number of Additional Exemptions²
^{2 Number of exemptions claimed for certain qualifying dependents.}
Multiply the taxable income computed in step 6 by 3.23 percent to obtain the annual Indiana tax withholding.
Divide the annual Indiana tax withholding calculated in step 7 by the number of pay dates in the tax year to obtain the biweekly Indiana tax withholding.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) homepage. Select the Publications tab and select U.S. Income Tax Formulas from the Publications menu to launch the tax map. Select the desired State from the map provided for the formula.

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