Bonus Tax Calculator — Indiana (2026)
Bonuses in Indiana are taxed as supplemental wages: the employer usually withholds a flat 22% federal, plus 7.65% FICA and Indiana state withholding. Withholding is not the final tax; the true cost is settled on your return. Enter your bonus to see both. Indiana uses a flat personal income tax of 3.00% applied to taxable income after a state standard deduction of $0.
Indiana Bonus Tax Calculator
The gross bonus before withholding.
Percentage method vs aggregate method
Under the percentage method the bonus is separated from regular pay and hit with the flat 22% federal rate (37% above $1 million of supplemental wages in a year). Under the aggregate method the employer combines the bonus with your normal check and withholds at your marginal rate — which can temporarily withhold far more than 22%.
Either way the bonus is ordinary income. If your marginal federal bracket is 24% or higher, the 22% flat withholding leaves you short at filing time; if you are in the 12% bracket, you are over-withheld and get it back as a refund.
The Indiana layer on bonuses
Indiana taxes bonus income at the same flat rate as salary — up to 3.00%. A $10,000 bonus therefore carries roughly $300 of Indiana tax at the top rate, on top of federal and FICA.
Every Indiana county levies its own income tax, ranging from 0.5% to 3.0% (Marion County / Indianapolis: 2.02%).
Reducing the tax on a Indianapolis bonus
Deferring part of the bonus into a 401(k) or HSA cuts federal and Indiana income tax immediately, though FICA still applies. Some employers allow a separate bonus deferral election — ask payroll before the payment date, not after.
Timing matters too: pushing a bonus into January shifts the tax year, useful if this year included unusually high income from manufacturing work or an equity event.
Local and payroll taxes Indiana adds on top
County income tax is withheld alongside the state rate based on your county of residence on 1 January. That deduction sits outside the federal and state income tax lines, so build it into your own budget on top of the numbers above.
Every Indiana county levies its own income tax, ranging from 0.5% to 3.0% (Marion County / Indianapolis: 2.02%).
Bonuses are wages, so every local layer that applies to your regular Indiana paycheck applies to the bonus too — which is why a supplemental payment often nets a smaller share than your salary does.
Working across a state line from Indiana
Indiana holds income-tax reciprocity agreements with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. If you commute between them, your wages are taxed only by your state of residence — file the exemption certificate with your employer so the wrong state is not withheld from every paycheck.
Remote and hybrid work complicates this further: most states tax income where the work is physically performed, so a Indianapolis resident spending part of the year at a client site in Illinois may owe a nonresident return there. Keep a day-count log if you split time between states.
The rest of your Indiana tax bill
Indiana charges a 7% state sales tax, homeowners pay an average effective property tax of 0.84% of market value, and the minimum wage in force during 2026 is $7.25 an hour.
7% statewide with no local sales tax.
Income tax is only one part of a state's take. Indiana recovers revenue through sales and property tax as well, which is why headline income tax rates alone are a poor guide to how far a salary really goes. Indiana exempts Social Security and offers a deduction for certain military and federal civil service pensions.
Indiana vs Illinois on the same salary
On a $75,000 salary, a single filer keeps about $59,343 a year in Indiana against roughly $57,880 in Illinois — a difference of $1,463, or $122 a month.
Effective combined rates are 20.9% in Indiana and 22.8% in Illinois. Set that gap against living costs: index 90 here versus 93 there, with property tax at 0.84% and 2.07% respectively.
Indiana income tax brackets 2026 (single filer)
| Taxable income | Rate |
|---|---|
| $0 and up | 3.00% |