The Indiana Department of Revenue has updated its personal income tax guidance regarding application of state and county income taxes to residents with out-of-state income and nonresidents with Indiana source income. The bulletin discusses withholding requirements for Indiana residents with out-of-state income. Previously, the state of California was included on the list of reverse credit agreement states, however, effective for tax years 2017 and later, it is no longer treated as a reverse credit state. Further, the bulletin has been updated to reflect the repeal of the non-Indiana locality earning deduction. The deduction was available to those who pay income tax to a locality outside Indiana. Finally, the county income tax credit is now allowed against all county income taxes. Previously, the credit was not allowed against the county economic development income tax. (Information Bulletin #28, Indiana Department of Revenue, November 2016.)
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