Indianapolis local tax guide
Who pays Indianapolis's local tax
Your address on January 1 decides your county rate for the whole year. If you lived in Marion County that day, you pay 2.02% on your Indiana income no matter where in the state you work. Commuters from Hamilton, Hendricks, or Johnson County pay their own county's rate, not Marion's, even if every workday is downtown. People who lived outside Indiana on January 1 but whose principal job was in Marion County pay the Marion rate on wages earned here, including residents of Ohio, Kentucky, and Michigan whom reciprocity exempts from the state tax.
How the Marion County tax works
Indiana lets each of its 92 counties set a Local Income Tax, and Marion County's 2026 rate is 2.02%. Because Indianapolis and Marion County have operated as a consolidated government since Unigov, the county tax is effectively the city's income tax. Beech Grove, Lawrence, Southport, and Speedway sit inside the county and share the same rate.
The tax is flat, with no brackets or income threshold. It applies to the same Indiana adjusted gross income the state taxes at 2.95%, so a traditional 401(k) deferral or pre-tax health premium lowers both bills at once.
Worked example: $75,000 in Indianapolis
A single filer earning $75,000 owes $7,670 in federal income tax, $4,650 in Social Security, and $1,088 in Medicare. Indiana's flat tax takes $2,183 after the $1,000 personal exemption, and the Marion County tax, figured on that same reduced base, adds $1,495. Take-home pay is $57,915 a year, about $2,228 every two weeks.
Without any county tax, the same paycheck would come to $59,409, so living in Marion County costs this worker $1,495 a year. At $100,000 the county share rises to $2,000 and take-home falls to $74,259. The Indiana $75,000 salary breakdown shows the state-only view.
Withholding and filing for Marion County
Employers learn your county from Form WH-4, which asks for your county of residence and county of principal employment as of January 1. If you move from Marion to Hamilton County in June, file a new WH-4, but the switch only takes effect for next year's tax; Marion's rate applies through December.
County tax is reported on your Indiana IT-40 alongside the state tax, so there is no separate city return to file. Nonresidents who owe Marion County tax report it on Form IT-40PNR.
How Indianapolis compares with other Indiana cities
At 2.02%, Marion County sits in the upper middle of the cities we track. Anderson's Madison County charges 2.25% ($1,665 at $75,000) and Bloomington's Monroe County 2.14% ($1,584), while Fort Wayne pays 1.59% ($1,177) and Evansville 1.25% ($925). A Marion County resident pays $570 more than an Evansville resident at the same salary.
For a commuter, the comparison that matters is your home county against Marion. Someone living in Anderson and driving to a downtown job pays Madison County's higher rate, about $170 more a year at $75,000 than a co-worker who lives in the city. Compare more places on the Anderson calculator and the Fort Wayne calculator.
Tips for Indianapolis paychecks
Check your WH-4 county codes
A WH-4 left blank or listing an old county means the wrong rate all year. Confirm it shows Marion County if you lived here on January 1.
Moving to Indianapolis mid-year
If you neither lived nor worked in Indiana on January 1, you owe no county tax that year. Marion County tax starts the following January.
Use pre-tax savings
A traditional 401(k) contribution cuts federal, Indiana, and Marion County tax together, since the county starts from Indiana adjusted gross income.
Suburban job, city home
Working in Carmel or Fishers does not change your rate if you live in Indianapolis. Marion County's 2.02% still applies to your whole income.