Indiana Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Indiana home — is a W-2 employee. Indiana household payroll includes state and county income-tax withholding from day one, Indiana DWD unemployment filings, Form WH-4 at hire, and annual WH-3 reconciliation. There is no statewide paid leave and no PFML.
Start Payroll Free →When the rules apply
Indiana household employers mainly need to watch the federal payroll thresholds, Indiana state/county withholding from day one, and the $1,000 quarterly Indiana unemployment threshold:
How Nest Payroll handles this
Each pay period, you pay your employee the net amount directly — through Venmo, Cash App, Zelle, your banking app, or by check. Nest generates the pay stub, calculates payroll taxes, withholds Indiana state and county tax, and registers you with Indiana DWD once the $1,000 quarterly threshold applies.
Federal taxes — quarterly EFTPS payments
At the end of each federal quarter, Nest debits your bank account for federal taxes owed and remits them to the IRS via EFTPS. At year-end, Schedule H on your Form 1040 reconciles those household payroll taxes.
Indiana state taxes — WH-1, UC-1, and WH-3
Indiana state and county withholding runs through Form WH-1. Employer-paid unemployment is filed with Indiana DWD on Form UC-1. At year-end, Indiana withholding is reconciled on Form WH-3.
Set up payroll in 5 minutes.
Nest handles Indiana payroll calculations, paystubs, UC-1 filings, state/county withholding support, and year-end Schedule H — all for $42/mo.
Setup checklist (before they start)
Indiana Workers' Compensation Insurance — voluntary for households
Indiana generally excludes domestic service performed in a private home from mandatory workers' compensation coverage. Most household employers are not required to carry workers' comp for a household employee.
Voluntary coverage is still worth considering. Workers' comp can protect you if your employee is injured on the job and gives the employee a predictable benefits path without a lawsuit.
Form I-9 (Employment Eligibility)
Have your employee complete the Form I-9 at hire to verify they're authorized to work in the United States. You don't submit this anywhere — keep it filed in case of audit.
Federal W-4 and Indiana Form WH-4
The federal W-4 determines federal income tax withholding if you and your employee agree to withhold it. Indiana also requires Form WH-4 at hire for state and county withholding.
Form WH-4 is important because it captures the employee's county of residence and county of principal employment, which drives Indiana county tax withholding.
Indiana New Hire Reporting
Report new hires to the Indiana New Hire Reporting Center within 20 days of the start date. You can file online at the link above. Federal law requires this; Indiana penalty for failure is up to $25 per missed report.
Required Employment Posters
Even with a single household employee, IN requires the following workplace posters (or equivalent notification, since your home isn't a typical workplace):
- Federal posters: FLSA, FMLA, EEO, USERRA, Polygraph Protection
- Indiana Minimum Wage poster (Indiana DWD — required posters)
- Indiana Unemployment Insurance for Employees poster
- Indiana Workers' Compensation poster (if voluntary coverage purchased)
For a household setting, a single binder kept in a common area satisfies the posting obligation in most cases.
Written Work Agreement
Indiana does not require a written employment agreement, but it's strongly recommended. A clear written agreement reduces misunderstandings and protects both parties when situations come up that you didn't anticipate.
Use our free nanny contract template as a starting point — it covers compensation, hours, duties, vacation, sick time, confidentiality, and at-will employment language.
Pay & compensation
Minimum Wage — federal floor of $7.25/hr
Indiana’s minimum wage is $7.25/hr (Indiana Code § 22-2-2-4) — matching the federal floor. There are no local city or county minimum wages in Indiana (state law preempts local wage ordinances). In practice, household-employer market rates are generally well above this; nanny pay in Indianapolis, Fort Wayne, Evansville, and South Bend typically ranges from $15–$22/hr depending on experience and responsibilities.
Overtime — 1.5× regular pay over 40hr/week
Federal Fair Labor Standards Act (FLSA) overtime rules apply: live-out household employees get 1.5× their regular hourly rate for any hours over 40 in a workweek. Live-in household employees are exempt from federal OT (FLSA exemption for live-in domestic workers), and Indiana has no state OT requirement that overrides this.
| Worker type | OT trigger | Rate |
|---|---|---|
| Live-out (most nannies, housekeepers, caregivers) | Over 40 hr/week | 1.5× regular |
| Live-in | FLSA-exempt — no OT required | 1.0× regular |
"No Tax on Overtime" Deduction (2025–2028)
The federal overtime deduction may let household employees deduct the premium portion of qualifying overtime pay on their personal tax return. This is a federal income-tax rule; it does not change how you calculate overtime, FICA, Indiana state or county withholding, or payroll records.
Pay Frequency
Household employees are usually treated as non-exempt hourly workers under FLSA rules — even when you've agreed to pay a "salary," federal FLSA treats it as a wage covering a fixed number of hours per week, with overtime owed on hours past 40.
Under Indiana Code § 22-2-5-1, Indiana employers must pay wages at least biweekly or semimonthly on regular paydays designated in advance. Most household payroll arrangements pay weekly or biweekly to keep cash flow predictable for both sides.
Mileage Reimbursement
Indiana does not have a state-mandated mileage reimbursement rate for private employers. If your employee uses their own car for work-related driving (errands, school pickup, doctor's appointments for the children), reimburse at the federal IRS standard mileage rate — $0.70/mile for 2026. Reimbursements at or below the federal rate are not taxable wages.
Paystub Requirements
Indiana does not have a specific statute requiring itemized paystubs, but you should provide them anyway for clear recordkeeping. Each paystub should show: gross wages, hours worked, deductions (federal income tax, FICA, IN state and county tax), net pay, and pay period dates.
Time off & leave
Paid Sick Leave — none required statewide
Indiana does not have a statewide paid sick leave law, and no city in Indiana has enacted a local paid sick leave ordinance. Sick time is offered at the employer's discretion.
If you choose to offer sick leave, common household-employer practice is 5–10 days/year, usable for the employee's own illness or to care for an immediate family member.
Vacation & PTO
Indiana does not require paid vacation. If you offer it, document the policy in writing — under Indiana law, vacation pay is enforceable to the extent your written policy states it will be paid out at separation. A clear policy with a written cap (or "no payout at separation" provision) protects you.
Upon departure
When the working relationship ends — whether the employee resigns or you terminate — Indiana’s final pay rule (Indiana Code § 22-2-9-2) requires final wages to be paid by the next regular payday following separation.
At separation, give your employee a final paystub and a copy of any timekeeping records you've maintained. If you've offered vacation as part of your written policy, pay out the earned-but-unused portion (pro-rated through the last day worked, at the final rate of pay) per your policy.
Year-end forms
Your responsibilities
- Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it
- Attach Schedule H to your Form 1040 by April 15 — Nest produces a signature-ready version
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Quarterly UC-1 filings with Indiana DWD once registration applies
- WH-1 withholding remittance for Indiana state and county tax
- Form WH-3 annual reconciliation with the Indiana Department of Revenue
Bonuses, vacation payouts, and other supplemental wages. Nest uses the aggregate method for federal income tax withholding: bonuses, PTO payouts, and other supplemental wage payments are combined with regular wages and withheld at the worker's regular W-4 rate — not the flat 22% federal supplemental rate. For most household workers, this produces a slightly larger net check than the flat method would.
Tax breaks for household employers
Two federal tax breaks may help offset your nanny payroll costs:
For nannies caring for school-aged kids, families often use the DCFSA first (better tax savings for most), then claim the credit on any expenses above the FSA limit. Note: you cannot claim the same expenses under both — but you can split them.
Resources & free tools
The information on this page is general in nature and not tax, legal, or financial advice. Indiana rules change. Verify current rates and rules at Indiana Department of Revenue and Indiana Department of Workforce Development, or consult a tax advisor.