Hammond local tax guide
Who pays Hammond's local tax
Hammond sits directly on the Illinois border, so its workforce runs both ways. Hammond residents owe Lake County's 1.5% on their full income whether they work at a refinery in Whiting or an office in the Loop. Illinois residents from Calumet City, Lansing, or Chicago's southeast side who work in Hammond owe Indiana state tax and, if Hammond was their principal workplace on January 1, Lake County's rate on those wages. Indiana residents from Porter or another county pay their home county's rate.
How Lake County taxes Hammond paychecks
Hammond, a city of about 81,000 in Indiana's northwest corner, has no city income tax. Lake County charges a flat 1.5% on Indiana adjusted gross income, and that rate is the same in Hammond, Gary, Whiting, and Crown Point.
For Indiana residents, the county of residence on January 1 sets the rate for the full year. For people who lived outside Indiana on January 1, the county where they earned most of their wages that day decides it.
Worked example: $75,000 in Hammond
A single filer living and working in Hammond on $75,000 pays $7,670 in federal tax, $4,650 in Social Security, $1,088 in Medicare, $2,183 in Indiana tax, and $1,110 to Lake County, keeping $58,299 a year. That is about $2,242 per biweekly paycheck.
A worker with no county tax would keep $59,409, so Lake County costs $1,110 here. At $40,000 the county takes $585; at $150,000 it takes $2,235.
Illinois residents working in Hammond
Illinois is not one of Indiana's reciprocity partners, so the border offers no state tax shortcut. An Illinois resident with a Hammond job has Indiana state tax withheld, plus Lake County tax if the job was their principal one on January 1, and files Indiana Form IT-40PNR.
Illinois still taxes its residents on all income, so the Illinois return claims a credit for tax paid to Indiana. Indiana's 2.95% rate is lower than Illinois's 4.95%, so an Illinois resident pays the larger Illinois rate overall. Whether Illinois credits the Lake County portion is a separate question to check on the Illinois credit schedule.
Hammond residents working in Illinois
Hammond residents with Chicago jobs file an Illinois nonresident return and then claim Indiana's credit for taxes paid to other states on the IT-40. That credit offsets state tax only, so Lake County's 1.5% stays due. If your employer withholds only Illinois tax, make Indiana estimated payments. Compare nearby rates on the Indiana state page or the take-home pay comparison tool.
Tips for Hammond paychecks
Illinois residents: no WH-47
Form WH-47 is only for residents of reciprocal states. Illinois residents working in Hammond should expect full Indiana state and Lake County withholding.
Hammond residents with Chicago jobs: ask for county withholding
Request Indiana county withholding from your Illinois employer if it will do so. Otherwise, budget for about $1,110 at $75,000 when you file.
Date your move around January 1
Moving into Hammond from Illinois on January 2 rather than December 31 puts off Lake County tax until the next year, because county status is fixed on January 1.