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REMOTE EMPLOYEES

Hiring a remote employee in Indiana

Your company is in another state and one employee lives and works from home in Indiana. Which state's taxes apply, unemployment, paid leave and Indiana's employer rules, each with its official source.

Facts checked on October 5, 2026 against the official sources listed at the end of this page. For employers. General information, not legal or tax advice: confirm a rule with the agency before you rely on it.

Indiana at a glance

Income tax
Indiana withholding
Reciprocity
With Arizona, Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin
Unemployment
$9,500 wage base, 2.5% new employer
Paid leave
None
New hire report
Within 20 days

Which state's taxes apply

Work state
Indiana taxes wages for work done in Indiana. Withhold Indiana income tax on the employee's wages.Source: Indiana DOR, Departmental Notice #1, effective Oct. 1, 2026 (PDF) (opens in a new tab), checked October 5, 2026
Withholding form
Form WH-4Source: Indiana DOR, Withholding Tax Forms (opens in a new tab), checked October 5, 2026
Reciprocity
If your office is in Arizona: Indiana residents working there are withheld for Indiana, with Form WEC. If your office is in Kentucky: Indiana residents working there are withheld for Indiana, with Form K-4 (box 4) or 42A809. If your office is in Michigan: Indiana residents working there are withheld for Indiana, with MI-W4 (line 8b). If your office is in Ohio: Indiana residents working there are withheld for Indiana, with IT 4 (Section III). If your office is in Pennsylvania: Indiana residents working there are withheld for Indiana, with REV-419, Employee's Nonwithholding Application Certificate. If your office is in Wisconsin: Indiana residents working there are withheld for Indiana, with Form W-220.Source: Arizona Department of Revenue, 2026 Form WEC Employee Withholding Exemption Certificate instructions (PDF) (opens in a new tab), checked October 5, 2026; Kentucky Department of Revenue, Form K-4 Kentucky's Withholding Certificate 2026, 42A804(12-2025) (PDF) (opens in a new tab), checked October 5, 2026; Michigan Treasury, Form 446, 2026 Michigan Income Tax Withholding Guide (Rev. 02-26, PDF) (opens in a new tab), checked October 5, 2026; Ohio Department of Taxation, Form IT 4, Employee's Withholding Exemption Certificate (Rev. 01/24, PDF) (opens in a new tab), checked October 5, 2026; PA Department of Revenue, PA Personal Income Tax Guide: Gross Compensation (opens in a new tab), checked October 5, 2026; Wisconsin DOR, Form W-220, Nonresident Employee's Withholding Reciprocity Declaration (R. 7-22, PDF) (opens in a new tab), checked October 5, 2026
Convenience rules
If your company is in Delaware or New York, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in Indiana for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026
Office days in your company's state
That state's day limit, if it has one, decides whether it withholds on those days: see its page, or the helper below.
An employee from another state working in Indiana
Indiana has a 30-day rule: no Indiana withholding for a nonresident who works in Indiana 30 days a year or fewer, if the rule's other conditions are met.Source: Indiana DOR, Departmental Notice #1, Withholding (effective Oct. 1, 2026, PDF) (opens in a new tab), checked October 6, 2026

Where to withhold: two states

Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.

Your company is in
Employee lives and works from home in
Days a year at your office
Assigned to an employer office in New YorkMatters only in the states with a convenience rule (Connecticut, Delaware, New Jersey, New York and Pennsylvania), and only with office days there.

Income tax withholding

  • Indiana: all wages.

No New York withholding: the employee does no work in New York.

Unemployment

Indiana: the employee works from home there, so the work is localized in Indiana.

Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.

Unemployment

The employee works from home in Indiana, so the work is localized in Indiana: pay Indiana unemployment tax, not your company state's.

Agency
Indiana Department of Workforce Development (DWD)Source: Indiana DWD, Unemployment Insurance: Employers (opens in a new tab), checked October 5, 2026
Wage base
$9,500 Fixed by lawSource: Indiana DWD, Unemployment Insurance Employer Guide (PDF) (opens in a new tab), checked October 5, 2026
New employer rate
2.5% 2.5% until experience-rated (36 months of coverage and payroll in each of the three 12-month periods ending June 30); government 1.6% Surcharges includedSource: Indiana DWD, New Employer Premium Rate (opens in a new tab), checked October 5, 2026

Open the account: Indiana payroll tax registration

Indiana has no paid leave program funded through payroll.

Indiana employer rules

Employment law applies where the employee works, so these follow the employee into Indiana.

Final pay
Fired: By the regular payday for the pay period in which the separation occurred Quit: By the next regular paydaySource: Indiana Code 2026, IC 22-2-9-2 (separation) and IC 22-2-5-1 (voluntary leaving) (opens in a new tab), checked October 6, 2026
Pay frequency
At least semimonthly, or biweekly if requested; wages paid through a date no more than 10 business days before payday.Source: Indiana Code 2026, IC 22-2-5-1, Payment; voluntarily leaving employment (opens in a new tab), checked October 6, 2026
Pay notice
No pay-rate notice at hire. Employers covered by the state wage law (not FLSA-covered) give a statement of hours worked, wages paid and deductions each pay period (IC 22-2-2-8).Source: Indiana Code 22-2-2-8 (2026) (opens in a new tab), checked October 5, 2026
New hire reporting
Within 20 days of the start date.Source: Indiana New Hire Reporting Center, FAQs (opens in a new tab), checked October 5, 2026
E-Verify
Contractors on state or local public contracts for services and public works must use E-Verify for new hires; businesses receiving a state or local grant over $1,000 must enroll. No private-employer mandate.Source: Indiana Code 22-5-1.7-11 and 11.1 (2026) (opens in a new tab), checked October 5, 2026
Sick leave
No state sick leave law.Source: Indiana Code 22-2-16-3 (2026) (opens in a new tab), checked October 5, 2026

When the employee moves

Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.

Registering your business in Indiana, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.

More on Indiana

WORKLIO HCM

Payroll for employees who work from home in another state

Worklio HCM withholds by home and work state, reciprocity included, and handles city and county taxes. We help open state withholding and unemployment accounts when you hire somewhere new, and our registration service can register your employer tax accounts for you. Taxes are calculated, deposited and filed in every state and locality, and when an agency notice arrives, you upload it and our tax team resolves it.

Remote employees in other states

Sources

The agency page or document behind each fact, as checked.

General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.

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