What payroll taxes does an Indiana employer pay?

An Indiana employer pays the employer half of FICA — 6.2% Social Security up to the $168,600 wage base and 1.45% Medicare on all wages — plus federal FUTA and Indiana state unemployment insurance (SUI). Indiana does not impose a state employer disability or paid-leave payroll tax, so those four taxes are the core employer burden.

What is Indiana's SUI wage base and new-employer rate?

Indiana's state unemployment insurance tax applies only to the first $9,500 of each employee's wages each year. New employers are assigned a standard rate of 2.5% (construction new-employers pay more). Once you have a few years of history, you receive a merit rate based on your layoff experience, ranging from roughly 0.5% to 7.4%.

How does FUTA work in Indiana?

Federal unemployment tax (FUTA) is 6.0% on the first $7,000 of each employee's wages, but employers who pay their state UI on time earn a 5.4% credit, leaving an effective rate of 0.6% — a maximum of $42 per employee per year. Indiana is generally not a credit-reduction state, so the full credit applies and this calculator uses the 0.6% effective rate.

Does Indiana have a paid leave or disability payroll tax?

No. Unlike California, New York, Washington, or several other states, Indiana does not levy a state employer payroll tax for short-term disability insurance (SDI) or paid family and medical leave (PFML). That keeps the Indiana employer burden lower than in many states, limited to FICA, FUTA, and SUI.

How much does an employee really cost in Indiana?

Beyond the wage itself, employer payroll taxes typically add roughly 8–10% of pay for a worker earning average wages, driven mainly by the 7.65% FICA match. SUI and FUTA add a few hundred dollars more because their wage bases are low ($9,500 and $7,000). This calculator shows the exact figure for the wage and SUI rate you enter.

Indiana Employer Payroll Tax Calculator

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When you hire in Indiana, the paycheck is only part of the cost. Employers owe their own share of Social Security and Medicare, federal unemployment tax, and Indiana state unemployment insurance. This calculator adds up every employer-side payroll tax so you can budget the true cost of an Indiana employee.

How it works

Each employer tax has its own rate and wage cap:

Employer Social Security = min(wages, $168,600) × 6.2% Employer Medicare = wages × 1.45% FUTA = min(wages, $7,000) × 0.6% (effective, after the 5.4% state credit) Indiana SUI = min(wages, $9,500) × your SUI rate

The per-employee figure is the sum of these four, multiplied by your headcount for the total.

The Indiana specifics

SUI wage base $9,500. Indiana only taxes the first $9,500 of each worker’s wages for unemployment.
New-employer rate 2.5%. Until you build an experience history, that is your standard SUI rate; merit rates later range from about 0.5% to 7.4%.
No SDI or PFML. Indiana imposes no state employer disability or paid-leave payroll tax, unlike many coastal states.

Worked example

One employee earning $45,000 per year, new-employer SUI rate 2.5%:

Social Security = $45,000 × 6.2% = $2,790
Medicare = $45,000 × 1.45% = $652.50
FUTA = $7,000 × 0.6% = $42
Indiana SUI = $9,500 × 2.5% = $237.50
Total employer payroll tax = $3,722 for the year

Note: This is an estimate, not tax advice. Your actual SUI rate is assigned by the Indiana Department of Workforce Development, and credit-reduction status can change FUTA. Verify at irs.gov and in.gov/dwd.