Indiana Tax Changes - December 2024
Remote Seller Threshold Changes:
- The economic threshold test for remote sellers has been updated. The previous requirement of 200 separate transactions has been removed, simplifying the process for remote sellers operating in Indiana.
State and County Income Tax Rate Adjustments:
- Several counties have made changes to their income tax rates:
- Decatur County: Decreased from 0.025 to 0.0245.
- Fayette County: Increased from 0.0257 to 0.0282.
- Fulton County: Increased from 0.028 to 0.0288.
Individual Income Tax Cuts:
- Indiana is in the midst of a staggered individual income tax cut, which is expected to save residents nearly 300million∗∗in∗∗2024∗∗and∗∗300million∗∗in∗∗2024∗∗and∗∗2 billion over the first five years. The top marginal tax rate will decrease from 3.05% in 2024 to 3.00% in 2025.
General Tax Updates:
- The Indiana Department of Revenue has released a summary of various tax-related changes, including credits and other relevant updates for taxpayers.
December 2024
Indiana Corporate Income Tax—Indiana updates guidance on 30-day safe harbor rule for nonresident employees.
The Indiana Department of Revenue has clarified the 30-day safe harbor rule, which permits an income tax exemption for nonresident employees who work in Indiana for 30 days or less during the calendar year. Remote work is considered to be performed in the state where the work takes place, and an employee must be physically present in Indiana for the workday to count toward the 30 days. The safe harbor only applies compensation received as an employee and does not apply self-employment income or income received from a pass-through entity. Income received as an independent contractor does not qualify for the safe harbor unless the independent contractor also performs work as an employee with substantially similar job duties, in which case the days worked as an independent contractor are also counted toward the total days worked in Indiana. Additionally, while employers do not have to withhold state income tax from employees who qualify for the safe harbor, they are required to withhold Indiana local income taxes for any employee with a principal place of employment in an Indiana county on January 1. (Indiana Information Bulletin No. IT28, 12/01/2024; Indiana Information Bulletin No. IT32, 12/01/2024; Indiana Information Bulletin No. IT33, 12/01/2024.)
Indiana Corporate Income Tax—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Corporate Income Tax—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)
Indiana Credits and Incentives—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Credits and Incentives—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)
Indiana Personal Income Tax—Indiana updates guidance on 30-day safe harbor rule for nonresident employees.
The Indiana Department of Revenue has clarified the 30-day safe harbor rule, which permits an income tax exemption for nonresident employees who work in Indiana for 30 days or less during the calendar year. Remote work is considered to be performed in the state where the work takes place, and an employee must be physically present in Indiana for the workday to count toward the 30 days. The safe harbor only applies compensation received as an employee and does not apply self-employment income or income received from a pass-through entity. Income received as an independent contractor does not qualify for the safe harbor unless the independent contractor also performs work as an employee with substantially similar job duties, in which case the days worked as an independent contractor are also counted toward the total days worked in Indiana. Additionally, while employers do not have to withhold state income tax from employees who qualify for the safe harbor, they are required to withhold Indiana local income taxes for any employee with a principal place of employment in an Indiana county on January 1. (Indiana Information Bulletin No. IT28, 12/01/2024; Indiana Information Bulletin No. IT32, 12/01/2024; Indiana Information Bulletin No. IT33, 12/01/2024.)
Indiana Personal Income Tax—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Personal Income Tax—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)
December 2024
Indiana Corporate Income Tax—Indiana updates guidance on 30-day safe harbor rule for nonresident employees.
The Indiana Department of Revenue has clarified the 30-day safe harbor rule, which permits an income tax exemption for nonresident employees who work in Indiana for 30 days or less during the calendar year. Remote work is considered to be performed in the state where the work takes place, and an employee must be physically present in Indiana for the workday to count toward the 30 days. The safe harbor only applies compensation received as an employee and does not apply self-employment income or income received from a pass-through entity. Income received as an independent contractor does not qualify for the safe harbor unless the independent contractor also performs work as an employee with substantially similar job duties, in which case the days worked as an independent contractor are also counted toward the total days worked in Indiana. Additionally, while employers do not have to withhold state income tax from employees who qualify for the safe harbor, they are required to withhold Indiana local income taxes for any employee with a principal place of employment in an Indiana county on January 1. (Indiana Information Bulletin No. IT28, 12/01/2024; Indiana Information Bulletin No. IT32, 12/01/2024; Indiana Information Bulletin No. IT33, 12/01/2024.)
Indiana Corporate Income Tax—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Corporate Income Tax—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)
Indiana Credits and Incentives—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Credits and Incentives—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)
Indiana Personal Income Tax—Indiana updates guidance on 30-day safe harbor rule for nonresident employees.
The Indiana Department of Revenue has clarified the 30-day safe harbor rule, which permits an income tax exemption for nonresident employees who work in Indiana for 30 days or less during the calendar year. Remote work is considered to be performed in the state where the work takes place, and an employee must be physically present in Indiana for the workday to count toward the 30 days. The safe harbor only applies compensation received as an employee and does not apply self-employment income or income received from a pass-through entity. Income received as an independent contractor does not qualify for the safe harbor unless the independent contractor also performs work as an employee with substantially similar job duties, in which case the days worked as an independent contractor are also counted toward the total days worked in Indiana. Additionally, while employers do not have to withhold state income tax from employees who qualify for the safe harbor, they are required to withhold Indiana local income taxes for any employee with a principal place of employment in an Indiana county on January 1. (Indiana Information Bulletin No. IT28, 12/01/2024; Indiana Information Bulletin No. IT32, 12/01/2024; Indiana Information Bulletin No. IT33, 12/01/2024.)
Indiana Personal Income Tax—Indiana issues guidance on attainable homeownership tax credit.
The Indiana Department of Revenue has published an income tax information bulletin providing guidance on the attainable homeownership tax credit. The credit is equal to 50% of contributions made to affordable housing organizations approved by the Indiana Economic Development Corporation, such as Habitat Indiana, up to a maximum credit of $10,000 per taxpayer. The credit is limited to the taxpayer's state adjusted gross income tax liability for the year in which the contribution is made, with any unused amount eligible to be carried forward for up to five years. Additionally, the Department limits the total amount of credit claims to $4 million per state fiscal year. (Indiana Information Bulletin No. IT120, 12/01/2024.)
Indiana Personal Income Tax—Indiana provides guidance on health reimbursement arrangement tax credit
The Indiana Department of Revenue published a new income tax information bulletin with guidance on the health reimbursement arrangement tax credit, which is available to employers with fewer than 50 employees who opt for health reimbursement arrangements instead of providing traditional health insurance to employees, beginning with the 2024 tax year. To qualify for the credit an employer must contribute an amount toward the health reimbursement arrangement equal to the level of benefits provided in the previous year during which the employer provided health insurance benefits to employees. The credit is computed per employee and is limited to the lesser of the employer's contribution to the health reimbursement arrangement for a covered employee or $400 for the first year the arrangement is established in 2024 or later, $200 for the second year, and $0 for the third and subsequent years. The total amount of the credit available statewide is $10 million per state fiscal year. (Indiana Information Bulletin No. IT122, 12/01/2024.)