State income taxes can take a pretty significant bite out of your paycheck. If you live in certain states, you could lose another chunk of your hard-earned cash to your city, county, or school district. Seventeen states allow municipalities, counties, school districts, and special districts to impose additional local income taxes. Some municipalities are much kinder than others.
- About a third of all states allow their counties, municipalities, and other local jurisdictions to impose an income tax.
- Tax rates are often lower than at the federal or state levels.
- Not all states have a local tax in every jurisdiction. Only five cities in Colorado impose the tax, while Kansas has 484 taxing jurisdictions.
- Most jurisdictions tax nonresidents who work there at a lower rate. Kansas doesn’t tax nonresidents at all.
Alabama has four local taxing jurisdictions: three cities and one county. Two cities, Bessemer and Birmingham, levy an income tax of 1%. Gadsden's rate is 2%. Macon County imposes a 1% tax as well. The tax is imposed on both residents and nonresidents who work in these locations.
California has just one local taxing jurisdiction: the city of San Francisco. The tax is .38% as of 2021. It's levied on both residents and nonresidents who work there.
Five Colorado cities impose an income tax as a flat dollar amount on compensation earned by both residents and nonresidents:
- Aurora: $2 per month
- Denver: $5.75 per month
- Glendale: $10 per month
- Greenwood Village: $4 per month
- Sheridan: $6 per month
Only Wilmington levies a local income tax in this state. It's a flat 1.25%. It's the same rate for residents and nonresidents.
All 92 counties in Indiana have an individual income tax, ranging from 1.5% in Vermillion County to 2.85% in Pulaski County.
Allen County levies an income tax at 1.48%, Clinton County at 2.45%, Fountain County at 2.1%, LaGrange County at 1.65%, Marion County at 2.02%, and Sullivan County at 1.7% as of January 2021.
Iowa is home to more than 280 local taxing jurisdictions. All but one of them are school districts. They each impose an income tax surcharge ranging from 1% to 20% of state liability. Appanoose County also levies a 1% "emergency services" surtax on income.
There are 484 local taxing jurisdictions in Kansas, including counties, cities, and townships. But the income tax is imposed only on earnings derived from interest, securities, and dividends, not wages. Rates range from .13% to 2.5%.
Nonresidents who work in Kansas are exempt.
Kentucky has 210 taxing jurisdictions. Rates range from 0.01% in Elsmere, Hart County, and Spencer County to 2.5% in Bellevue, Covington, Newport, and Southgate as of 2022.
All 24 Maryland counties levy income taxes on both residents and nonresidents. Tax rates range from 2.25% in Worcester County to 3.20% in Baltimore County, Caroline, Dorchester, Howard, Kent, Montgomery, Prince George's, Queen Anne's, Somerset, Washington, and Wicomico Counties in 2022. The city of Baltimore also has an income tax of 3.2%.
Several Michigan cities impose income taxes on residents at a rate of 1.0% as of 2021. Nonresidents pay 0.5%. Four cities levy higher rates, however:
- Detroit: 2.4% on residents, 1.2% on nonresidents
- Grand Rapids: 1.5% on residents, 0.75% on nonresidents
- Highland Park: 2.0% on residents, 1.0% on nonresidents
- Saginaw: 1.5% on residents, 0.75% on nonresidents
Kansas City and St. Louis have an income tax of 1% as of 2021. They call it an "earnings tax." Both cities charge nonresidents the same rate.
The city of Newark imposes a flat 1% tax on earned income in addition to the state income tax. The same rate applies to both residents of the city and to nonresidents who work there.
Yonkers and New York City both have individual income taxes. New York City's income tax rates ranged from 3.078% to 3.876% in 2021. But the city doesn't impose the tax on nonresidents. The Yonkers tax is equal to 16.75% of a resident's state tax.
There are 848 taxing jurisdictions in Ohio. Rates range from 0.25% to 3% for both residents and nonresidents as of 2021.
The Tri-Met Transit District, which includes Portland, assesses an income tax of 0.6918% on both residents and nonresidents. The Lane County Transit District, which includes Eugene, assesses a tax on earned income of 0.0067% on residents and nonresidents alike as of 2021.
Most municipalities in Pennsylvania assess a tax on wages called the Earned Income Tax. Rates for residents range from a low of 1% up to 3.87% in Philadelphia, 3.6% in Reading, 3.4% in Scranton, and 3% in Pittsburgh and Wilkes-Barre. Nonresidents are subject to lesser rates in most cities that tax at over 1%.
West Virginia has four taxing jurisdictions. They charge a flat dollar rate, not a percentage:
- Charleston: $6 per pay period
- Huntington: $10 per pay period
- Parkersburg: $5 per pay period
- Weirton: $2 per pay period
Those who are paid weekly in these areas suffer the greatest burden: $520 a year in Huntington. Someone who is paid monthly would pay $120. The rates are the same for both residents and nonresidents.
Frequently Asked Questions (FAQs)
Do you pay local taxes where you live or where you work?
You typically have to pay both. Some municipalities have a lower tax rate for nonresidents. Some jurisdictions may offer a credit for taxes paid to another locality. Contact your local tax authority to find out more about paying taxes in your city.
What states have no income tax?
Nine states have no tax on earned income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire does tax interest and dividend income, however.