What Are Local Income Taxes?
Quick Answer
Local income taxes are additional income taxes imposed by cities, counties, or school districts on top of state and federal taxes. Not all areas have them, but those that do can add 1-4% to your total tax bill. The most notable is New York City's tax of up to 3.876%, which on a $100,000 salary costs about $3,500 on top of already-high New York State taxes. Local taxes are often overlooked when comparing job offers or planning a move.
Cities and Regions With Local Income Taxes
Major Cities
| City | Local Tax Rate | Who Pays |
|---|---|---|
| New York City | 3.078% - 3.876% | Residents only |
| Philadelphia | 3.75% (residents), 3.44% (non-residents) | Both |
| Detroit | 2.4% (residents), 1.2% (non-residents) | Both |
| Baltimore (county) | 2.83% - 3.20% | Residents |
| Columbus, OH | 2.5% | Workers in city |
| Cincinnati, OH | 1.8% | Workers in city |
| St. Louis | 1.0% | Workers in city |
| Kansas City, MO | 1.0% | Workers in city |
States With Widespread Local Taxes
- Ohio: Most cities charge 1-3%
- Pennsylvania: Over 2,500 municipalities levy local taxes
- Indiana: County taxes from 0.5% to 2.5%
- Kentucky: Many cities charge occupational taxes of 1-2.5%
- Maryland: All counties charge local income tax (2.25-3.20%)
Real Example With Actual Numbers
Compare $90,000 in salary for workers in different parts of New York:
| Location | State Tax | Local Tax | Combined State+Local |
|---|---|---|---|
| NYC resident | ~$4,400 | ~$2,900 | ~$7,300 |
| Westchester County (suburb) | ~$4,400 | $0 | ~$4,400 |
| Buffalo | ~$4,400 | $0 | ~$4,400 |
Living in NYC adds nearly $2,900 in local income tax compared to anywhere else in New York State. That is $242/month less in take-home pay.
Now compare Philadelphia vs its suburbs:
| Location | State Tax (PA) | Local Tax | Combined |
|---|---|---|---|
| Philadelphia resident | ~$2,763 | ~$3,375 | ~$6,138 |
| Philadelphia worker (non-resident) | ~$2,763 | ~$3,096 | ~$5,859 |
| Suburban PA (no local) | ~$2,763 | $0 | ~$2,763 |
Philadelphia's local tax more than doubles the total state+local burden. Use the SalaryHog calculator to see your city's tax impact.
How Local Taxes Are Collected
Local income taxes are typically withheld by your employer, just like state tax and federal tax. They appear as a separate line on your pay stub, often labeled as "City Tax," "Local Tax," "Municipal Tax," or "Occupational Tax."
In some areas (especially smaller towns in Ohio and Pennsylvania), employers may not automatically withhold local taxes. You may need to file a local tax return and pay quarterly.
Impact on Total Tax Burden
Local taxes can significantly change the overall comparison between cities:
| City | Federal | State | Local | FICA | Total on $85K |
|---|---|---|---|---|---|
| NYC | $9,400 | $3,900 | $2,600 | $6,503 | $22,403 (26.4%) |
| Philadelphia | $9,400 | $2,610 | $3,188 | $6,503 | $21,701 (25.5%) |
| Houston (TX) | $9,400 | $0 | $0 | $6,503 | $15,903 (18.7%) |
| Jacksonville (FL) | $9,400 | $0 | $0 | $6,503 | $15,903 (18.7%) |
The difference between NYC and Houston is over $6,500 per year in total tax — mainly due to state and local taxes. Compare cities with the relocation tool.
Planning Around Local Taxes
- Research before accepting a job: A higher salary in NYC may not compensate for the local tax
- Consider suburbs: Living outside the city boundary can eliminate local tax while staying close to work
- Factor it into relocation decisions: Use the relocation tool to compare total cost
- Check non-resident rules: If you work in a city but live outside it, you may still owe the non-resident rate
See your complete tax breakdown including local taxes at the SalaryHog calculator.