Bloomington local tax guide
Who pays Bloomington's local tax
Monroe County residents, including Indiana University staff and faculty who live in town, pay 2.14% on their entire Indiana income. Commuters who drive in from Lawrence, Owen, Greene, or Brown County pay the rate of the county they lived in on January 1, not Monroe's. A worker who lived in another state on January 1 and whose main job is in Bloomington owes Monroe's rate on the wages earned here. Remote employees of an out-of-state company who live in Bloomington still owe Monroe County tax as residents.
Monroe County's tax and what it applies to
Bloomington, a city of about 79,000 built around Indiana University, does not levy a municipal income tax. The paycheck deduction labeled local tax is Monroe County's flat 2.14%, applied to the same Indiana adjusted gross income that Indiana taxes at 2.95%.
Monroe's rate is the second highest among the Indiana cities we track, behind only Madison County's 2.25%. That puts Bloomington residents ahead of Indianapolis, where Marion County charges 2.02%.
Worked example: $75,000 in Bloomington
On a $75,000 salary, a single filer pays $7,670 in federal income tax, $4,650 in Social Security, $1,088 in Medicare, and $2,183 in Indiana tax. Monroe County takes $1,584. Annual take-home pay is $57,826.
A worker with no county tax at all would keep $59,409, so Monroe County residence costs $1,584 a year at this salary. At $60,000 the county share is $1,263; at $100,000 it is $2,119, leaving $74,140.
Students, campus jobs, and moving in
Indiana fixes your county of residence on January 1 based on where you keep your primary home. New hires who arrive at IU from another state in August owe no Indiana county tax for that first year, as long as they neither lived nor worked in Indiana on January 1. Monroe County tax starts with the next January paycheck.
Students and staff with a part-time job should check that Form WH-4 lists the right county. Whether a student's primary home is the campus apartment or a parent's house elsewhere is a fact-specific question, so the county you enter should match where you actually live.
Withholding and how Bloomington compares
Your employer withholds county tax from the county codes on Form WH-4, and you settle up on your Indiana IT-40. A move during the year does not change the county until the following January.
Against other Indiana cities, Monroe residents pay $637 more at $75,000 than Lafayette residents in Tippecanoe County, a fellow Big Ten town. The gap with Terre Haute's Vigo County is $104. Compare rates on the Terre Haute calculator or the Indiana state page.
Tips for Bloomington paychecks
Live outside Monroe, pay your home rate
IU employees who live in a neighboring county pay that county's rate instead of 2.14%. Put your actual home county on WH-4.
Out-of-state arrivals get a county-tax gap year
If you moved to Bloomington after January 1 from another state, no Indiana county tax is due for that year. Enter not applicable on WH-4 for the county lines.
Use the 403(b) or 401(k)
University and hospital retirement plans reduce Indiana adjusted gross income, which trims the Monroe County tax along with state and federal tax.