The Indiana bonus tax calculator at the top of this page helps employers quickly estimate the net (take-home) pay employees should receive for bonus payments, using the state’s flat income tax rate.
Behind the numbers
Behind the numbers
Updated: July 11, 2025
Does Indiana tax bonuses?
Yes. Bonuses are taxed as regular wages and are subject to the flat state income tax.
How to calculate bonus tax in Indiana
Apply the flat 3% state withholding rate to the bonus, regardless of how it’s paid. Keep in mind that OnPay’s bonus calculator at the top of this page uses the current rate and can crunch the number for you.
How can employers in Indiana pay bonuses to employees?
Bonuses can be paid via:
- Check
- Direct deposit
- Pay card
Why are bonuses taxed differently from standard pay?
They aren’t — Indiana applies the same flat rate across all wage types.
How do bonuses work in Indiana?
Bonuses are reported on the employee’s W-2 and withheld using the same state rate as regular income.
How much tax is taken out of a bonus in Indiana?
3.00% state + 22% federal = 25%, plus FICA and any local income tax.