Terre Haute local tax guide
Who pays Terre Haute's local tax
Vigo County residents owe 2% on all their Indiana income, including staff at Indiana State University, Rose-Hulman, and the federal prison complex who live in town. Commuters from Clay, Parke, Sullivan, or Vermillion County pay their own county's rate. Illinois is about ten miles west, and Illinois residents whose main job is in Terre Haute owe Indiana's 2.95% state tax and Vigo's 2% county tax on wages earned here, since Indiana has no reciprocity agreement with Illinois.
Vigo County's 2% tax
Terre Haute, a city of about 58,000 on the Wabash River, has no municipal income tax. Vigo County's Local Income Tax is a flat 2% of the same Indiana adjusted gross income that the state taxes.
The rate is close to Marion County's 2.02%, so a Terre Haute resident pays only $15 less in local tax at $75,000 than an Indianapolis resident. Against Lafayette's Tippecanoe County, the Terre Haute bill is $533 higher.
Worked example: $75,000 in Terre Haute
For a single filer with a $75,000 salary, federal tax is $7,670, Social Security $4,650, Medicare $1,088, Indiana tax $2,183, and Vigo County tax $1,480. That leaves $57,929 a year.
With no local tax the same worker would keep $59,409, so Vigo County costs $1,480 at this salary. On a $40,000 salary, Vigo County collects $780 and the worker keeps $32,389.
Illinois commuters and residents who cross the line
An Illinois resident from Marshall or Paris working in Terre Haute has Indiana state and Vigo County tax withheld and files Form IT-40PNR. Illinois taxes its residents on all income and allows a credit for tax paid to another state, so check the Illinois credit schedule for how much of the Indiana tax it covers.
A Terre Haute resident who works in Illinois owes Illinois tax on those wages and claims Indiana's credit for taxes paid to other states. That credit applies only against Indiana's state tax, so Vigo County's 2% remains due on the full income.
Withholding and filing
Form WH-4 records your county of residence and county of principal employment as of January 1. A mid-year move to or from Vigo County does not change your county until the next January. County tax is reported on the IT-40. Compare other cities on the Indianapolis calculator or the Indiana state page.
Tips for Terre Haute paychecks
Illinois residents: expect full Indiana withholding
No reciprocity means no WH-47 exemption. Your Terre Haute paycheck will show both Indiana state tax and Vigo County tax.
Working in Illinois from Terre Haute
Ask your Illinois employer to withhold Indiana county tax, or set aside about $1,480 at $75,000 for the Vigo bill at filing time.
Check neighboring county rates
Living in Clay or Parke County while working in Terre Haute means paying that county's rate instead of Vigo's 2%.