What is a local income tax?
A local income tax is a tax levied by a city, county, or municipality on the earned wages of residents or people who work within its borders — separate from federal and state income taxes. If you live or work in a jurisdiction that has one, it gets deducted from your paycheck just like any other tax. The rate, who pays, and how it's calculated all vary significantly depending on where you are.
Some states allow nearly every municipality to set its own rate (Ohio has over 600 localities with their own taxes). Others restrict it to a handful of major cities. A few states have built the local tax into the state system so it's collected uniformly (Indiana and Maryland). And in 9 states — including Texas, Florida, and California — local income taxes are either prohibited or simply don't exist.
Washington D.C. — Its Own Jurisdiction
D.C. is neither a state nor a city with a "local" tax — it functions as its own state-equivalent jurisdiction. D.C. residents pay a graduated income tax ranging from 4% to 10.75% directly to the District. There is no separate city or county tax on top.
Key rule for commuters: Non-residents who work in D.C. owe zero D.C. income tax. If you live in Maryland or Virginia and commute into D.C., you pay only your home state's income tax — not D.C.'s.
D.C. Paycheck Calculator →States with local income taxes
These 13 states allow cities, counties, or municipalities to levy a local income tax on top of state and federal taxes. The scope and complexity vary widely — from a single city to hundreds of municipalities.
| State | Who It Affects | Rate Range | Notable Cities / Notes | Complexity |
|---|---|---|---|---|
| Alabama | Select cities & counties | 0.5% – 2.0% | Birmingham 1%, Jefferson County 1% (residents can owe both). Gadsden, Macon County, and a few others also participate. | Low complexity |
| Delaware | Wilmington only | 1.25% | Wilmington residents and non-residents who work there both pay 1.25%. No other Delaware city has a local tax. | Low complexity |
| Indiana | All 92 counties | 0.5% – 3.38% | Marion County (Indianapolis) 2.02%. Administered by the state — seamlessly withheld, most residents don't notice the separate layer. | State-managed |
| Kansas | Kansas City, KS area | Up to 1.0% | A small number of municipalities near Kansas City levy local earnings taxes at rates generally under 1%. | Low complexity |
| Kentucky | Most cities and counties | 0.5% – 2.5% | Louisville/Jefferson County 2.2%, Lexington 2.25%. Called an "Occupational License Fee" but functions as an income tax. | High |
| Maryland | All 23 counties + Baltimore City | 2.25% – 3.2% | Howard County 3.2%, Montgomery County 3.2%, Baltimore City 3.2%. Filed with the state return — fully seamless for residents. | State-managed |
| Michigan | ~24 cities | 1.0% – 2.4% | Detroit 2.4% residents / 1.2% non-residents. Grand Rapids, Lansing, Flint also have taxes. Non-residents typically pay half the resident rate. | MI City Calculator → |
| Missouri | Kansas City + St. Louis only | 1.0% flat | Both cities charge a flat 1% on wages earned within city limits. Applies to non-residents who work there, not just people who live there. | Low complexity |
| New York | NYC + Yonkers only | 3.078% – 3.876% | NYC brackets from 3.078% to 3.876%. Yonkers surcharge = 16.75% of NY State tax owed. No other NY city has a local tax. | NYC Calculator → |
| Ohio | 600+ municipalities | 0.5% – 3.0% | Columbus 2.5%, Cleveland 2.5%, Cincinnati 1.8%, Toledo 2.25%. Residents may owe tax to multiple localities. | Very High |
| Oregon | Portland metro area | 1.0% – 1.5% | Metro Supportive Housing Services Tax and Multnomah County Preschool for All Tax. Applies to higher earners (above ~$125k single). | Low complexity |
| Pennsylvania | Nearly every municipality + school district | 1.0% – 3.75% | Philadelphia wage tax 3.75% (residents), Pittsburgh 3%. Most localities split the rate between municipality and school district. | Very High |
| West Virginia | Select municipalities | 0.4% – 1.0% | Charleston and a handful of other cities levy a Business & Occupation (B&O) tax on wages. Rates are low. | Low complexity |
States with no local income taxes
These 37 states either prohibit local income taxes by law or constitution, or simply have none in practice. Your paycheck is only subject to federal and state taxes — no city or county layer on top. The 9 states with no state income tax are listed first, followed by the remaining 28 states that have state income tax but no local income tax.
| State | State Income Tax | Local Income Tax | Notes |
|---|---|---|---|
| No State Income Tax & No Local Income Tax | |||
| Alaska | None | None | No income tax at any level |
| Florida | None | None | State law prohibits local income taxes |
| Nevada | None | None | Constitutional prohibition |
| New Hampshire | None | None | Eliminated its interest & dividends tax in 2025 — now fully income-tax free |
| South Dakota | None | None | Constitutional prohibition |
| Tennessee | None | None | Hall Tax on investments fully eliminated in 2021 |
| Texas | None | None | Constitutional prohibition on income taxes |
| Washington | None | None | State law preempts local income taxes |
| Wyoming | None | None | Constitutional prohibition |
| Has State Income Tax — No Local Income Tax | |||
| Arizona | 2.5% flat | None | No local income taxes |
| Arkansas | 3.9% flat | None | No local income taxes |
| California | 1% – 13.3% | None | State law prohibits local income taxes |
| Colorado | 4.4% flat | None* | *Denver charges a small flat monthly occupational privilege fee (~$5.75), not a true income tax |
| Connecticut | 3% – 6.99% | None | No local income taxes permitted by state law |
| Georgia | 5.39% flat | None | No local income taxes |
| Hawaii | 1.4% – 11% | None | No local income taxes |
| Idaho | 5.8% flat | None | No local income taxes |
| Illinois | 4.95% flat | None | State constitution limits income taxes to state level only |
| Iowa | 3.8% – 5.7% | None* | *Some school districts may levy a small surtax (up to 20% of state liability), administered by the state |
| Louisiana | 3% flat | None | No local income taxes; flat 3% rate effective 2025 |
| Maine | 5.8% – 7.15% | None | No local income taxes |
| Massachusetts | 5% / 9% | None | No local income taxes permitted |
| Minnesota | 5.35% – 9.85% | None | No local income taxes |
| Mississippi | 4.7% flat | None | No local income taxes |
| Montana | 4.7% flat | None | No local income taxes |
| Nebraska | 2.46% – 5.84% | None | No local income taxes |
| New Jersey | 1.4% – 10.75% | None | No personal local income taxes; Newark's employer payroll tax does not apply to individuals |
| New Mexico | 1.7% – 5.9% | None | No local income taxes |
| North Carolina | 4.5% flat | None | No local income taxes |
| North Dakota | 1.1% – 2.5% | None | No local income taxes; one of the lowest state rates in the country |
| Oklahoma | 0.5% – 4.75% | None | No local income taxes |
| Rhode Island | 3.75% – 5.99% | None | No local income taxes |
| South Carolina | 0% – 6.4% | None | No local income taxes |
| Utah | 4.55% flat | None | No local income taxes |
| Vermont | 3.35% – 8.75% | None | No local income taxes |
| Virginia | 2% – 5.75% | None | No local income taxes |
| Wisconsin | 3.5% – 7.65% | None | No local income taxes |
Common questions
Do I pay local income tax if I work in a city but live outside it?
It depends on the city. Many local taxes apply to anyone who earns wages within the city limits, regardless of where they live. Missouri's Kansas City and St. Louis are good examples — if you commute in to work, you owe the 1% earnings tax. Other cities only tax residents. Always check the specific rules for your city.
Can I owe local income tax to more than one city?
Yes, in some states. In Ohio and Pennsylvania especially, you might owe tax to your home municipality and also to the city where you work, though most jurisdictions have reciprocity agreements or credit systems to prevent double taxation on the same income.
Is local income tax deductible on my federal return?
Yes — local income taxes are deductible as state and local taxes (SALT) on your federal return if you itemize deductions. However, the SALT deduction is currently capped at $10,000 per year (for 2025), so high earners in high-tax cities may not get the full benefit.
Why does Ohio have so many local taxes?
Ohio's local income tax system dates back to 1946 when Columbus became the first Ohio city to levy one. State law allows any municipality to adopt its own income tax ordinance, and over the decades most did — partly because Ohio's property tax system is relatively low, so local governments rely more heavily on income taxes to fund services like schools, police, and fire departments.
Are local income taxes included in PayCheckFox calculators?
State-level local taxes that are uniform across all residents — like Indiana's county taxes and Maryland's county taxes — are already factored into those state calculators. City-specific calculators (like NYC) are being added over time. Check the "Local & Cities" section in the navigation for the latest.