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Indiana Bonus Paycheck Calculator

A bonus paid in Indiana is withheld at the flat 22% federal supplemental rate in 2026 (37% on amounts above $1 million), plus FICA of 7.65% and a flat 2.95% Indiana income tax. That is roughly 32.6% withheld up front: withholding, not your final tax bill.

How are bonuses taxed in Indiana?

In Indiana, bonus withholding is typically 22% federal (the supplemental rate) plus 2.95% Indiana income tax plus 7.65% FICA: about 32.6% up front. Withholding isn't your final tax: at filing time a bonus is ordinary income, so any over-withholding comes back as a refund. Against the 4 states Indiana borders, the same a $10,000 bonus is worth $6,740 here: Ohio keeps $20 more ($6,760), Kentucky leaves $55 less ($6,685), Michigan leaves $130 less ($6,610) and Illinois leaves $200 less ($6,540). Ohio is the only border worth crossing for the tax alone.

Calculate your exact bonus take-home pay

Your bonus take-home

$3,370

from $5,000 bonusFor a $5,000 bonus · Indiana · single

Take-home 67%Taxes 33%
Bonus amount$5,000
Federal tax−$1,100
State tax−$148
Social Security−$310
Medicare−$73
Net bonus$3,370

Estimate based on 2026 federal and Indiana tax rules updated Oct 2026 How we calculate

Your details

Taxation method

Most common: a flat 22% federal rate is withheld on the bonus.

More options Base salary

What a bonus is actually worth in Indiana

On top of a $75,000 salary in Indiana, here is what each extra dollar survives federal tax, Indiana income tax and FICA in 2026:

BonusGrossIndiana taxYou keepShare kept
$5,000 bonus$5,000$148$3,37067.4%
$10,000 bonus$10,000$295$6,74067.4%
$25,000 bonus$25,000$738$16,85067.4%

Indiana takes about 2.9% of that money on top of the 22% federal marginal rate and 7.65% FICA.

How Indiana ranks on bonuses

Across all 50 states and DC, Indiana ranks 13th for what a $10,000 bonus leaves in 2026. That is $175 more than the median state ($6,565), and $723 more than California, where the same a $10,000 bonus leaves $6,017.

The best outcome anywhere is $7,035 in Alaska and the other states with no wage income tax, $295 more than Indiana keeps.

Indiana bonuses against the states next door

Crossing a state line changes what the same bonus is worth without changing what you are paid. Here is a $10,000 bonus in Indiana against the states it borders:

StateState income taxYou keepvs Indiana
Indiana$295$6,740—
Illinois$495$6,540$200 less
Kentucky$350$6,685$55 less
Michigan$425$6,610$130 less
Ohio$275$6,760$20 more

Local income tax on bonuses in Indiana

5 jurisdictions in Indiana levy an income tax of their own on top of the state rate. The calculator above does not include them, so add this if you live or work in one:

JurisdictionResident rateCost on $85,000
Marion County (Indianapolis)2.02%$1,717
St. Joseph County (South Bend)1.75%$1,488
Allen County (Fort Wayne)1.59%$1,352
Lake County1.50%$1,275
Vanderburgh County (Evansville)1.25%$1,063

How Indiana bonus withholding works

Short answer: your employer withholds a flat 22% for federal income tax (the supplemental rate), plus 7.65% for Social Security and Medicare, plus Indiana's flat 2.95% income tax: about 32.6% of a Indiana bonus withheld up front. Bonuses aren't actually taxed at a higher rate, though: at tax time they're ordinary income, and any over-withholding comes back in your refund. Here's how each piece works.

  • Federal supplemental rate: Most employers withhold federal income tax from bonuses at a flat 22%, $2,200 on a $10,000 bonus, or 37% above $1 million a year, regardless of your regular bracket.
  • Indiana flat tax: Indiana taxes bonuses like all other wages at its flat 2.95% rate: there's no separate state bonus rate. Local income taxes in some Indiana cities or counties are not included.
  • FICA taxes still apply: Social Security (6.2% up to the annual wage base) and Medicare (1.45%, plus 0.9% for high earners) come out of a bonus like any wage: $765 on $10,000.
  • Over-withholding is common: The flat 22% federal rate is often higher than your actual effective rate, and the difference comes back as a refund. In Indiana the whole $10,000 nets $6,740 once state tax and FICA are in.

Your actual bonus tax depends on your total annual income, not the bonus alone: these figures assume a $75,000 Indiana salary. Enter your own numbers above for an estimate that fits your situation.

Frequently Asked Questions

Typically about 32.6%: a flat 22% federal supplemental withholding, 2.95% Indiana income tax, and 7.65% FICA. Your actual tax owed depends on your full-year income and may be lower: the difference comes back as a refund when you file.

The IRS requires employers to withhold federal income tax from supplemental wages (including bonuses) at a flat 22% rate for amounts up to $1 million, rising to 37% above that. Your employer may alternatively add the bonus to your regular paycheck and withhold using the aggregate method. Worked through for Indiana: a $10,000 bonus keeps $6,740: 67.4% of it, after $295 of Indiana income tax.

It depends on your total annual income and tax bracket. If the 22% flat withholding rate is higher than your actual effective rate on the bonus, you'll get the difference back as a refund; if you're in a higher bracket, you may owe more. On a $75,000 salary in Indiana, a bonus is taxed at about 22% federally plus 2.9% to Indiana, so the 22% flat rate is close to the mark at that income.

Yes: as regular income. Indiana taxes all wage income, including bonuses, at its flat 2.95% rate; there is no separate state bonus rate. Local income taxes in some Indiana cities or counties are not included.

Splitting a bonus across pay periods can reduce withholding if your employer uses the aggregate method, which annualizes your income, but it changes the timing, not the amount you ultimately owe. Where you live changes the amount: Indiana ranks 13 of 51 on what a $10,000 bonus leaves, against $6,565 in the median state and $6,017 in California.

Against the 4 states Indiana borders, the same a $10,000 bonus is worth $6,740 here: Ohio keeps $20 more ($6,760), Kentucky leaves $55 less ($6,685), Michigan leaves $130 less ($6,610) and Illinois leaves $200 less ($6,540). Ohio is the only border worth crossing for the tax alone.

Indiana's 2.95% income tax is among the lowest flat rates in the nation, but the state compensates with a 7% state sales tax: one of the highest state sales tax rates. A big spender might pay more in sales tax than they'd pay in income tax in some other states. A $50,000 earner who spends $40,000 annually on taxable goods pays $1,475 in income tax plus $2,800 in sales tax, totaling $4,275 (8.6% of income). Factor in both income and spending patterns when evaluating Indiana.

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