The Indiana Department of Revenue has issued a departmental notice discussing the change in nonresident tax rates for local income taxpayers beginning on or after January 1, 2017. Specifically, the local income tax rate imposed on nonresidents after December 31, 2016 will be the same rate imposed on residents. Thus, if a taxpayer is subject to local income tax in a county, an employer must withhold the tax at the same rate for all individuals subject to that county’s tax rate. Further, a person subject to local income tax for a county is subject to tax at the same rate, regardless of whether the individual is a resident or nonresident taxpayer. (Indiana Department of Revenue, Departmental Notice #42, August 1, 2016.)
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