State income taxes can take a pretty significant bite out of your paycheck, and you could lose another chunk of your hard-earned cash to your city, county, or school district if you live in certain states. According to a 2019 report from the Tax Foundation, 17 states allow municipalities, counties, school districts, and special districts to impose additional, local income taxes.
Some municipalities are much kinder than others.
The vast majority of these taxes—more than 3,800—were levied at the municipal level.
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%, and 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 a pretty significant 1.5% as of 2021, and 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%, and 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 9%, but only on residents. Nonresidents are exempt, except in Appanoose County. Appanoose County also levies a 1% "emergency services" surtax on income.
There are 535 local taxing jurisdictions in Kansas, including 30 counties, 105 cities, and 400 townships. But the income tax is imposed only on earnings derived from interest, securities, and dividends, not wages, and nonresidents who work there are exempt. The rate is .75% at the county level, and the highest city or township rate is 2.25%.
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.
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. 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%. 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%. 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 2019, but the city doesn't impose the tax on nonresidents. The Yonkers tax is equal to 16.75% of a resident's state tax, and it's .50% of taxable income earned for nonresidents.
The New York City Metropolitan Transportation Authority levies a .34% tax on its workers, and residents of the New York/New Jersey Waterfront pay a flat city rate of 2%.
There are 848 taxing jurisdictions in Ohio. Rates range from 0.5% to 3% for both residents and nonresidents. The rate is 2.5% in Akron, Cleveland, Columbus, and Dayton. It increases to 2.75% in Youngstown but drops to 2.25% in Toledo and 2.10% in Cincinnati.
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.
Most municipalities in Pennsylvania assess a tax on wages. There were 2,978 taxing jurisdictions in this state as of 2019, imposing an income tax as well as a "local services tax." Pennsylvania cities with tax rates above 2% include Philadelphia at 3.8809%, Reading at 3.6%, and Scranton at 3.40%.
On the other end of the scale, the Bethlehem tax is just 1.0%, and the rate is 1.1% in Lancaster.
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 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 non-residents, and 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 income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire currently taxes interest and dividend income, but that will be phased out by January 1, 2024.