States Where Cities and Counties Levy Additional Income Taxes
You'll take a bit of a tax hit if you live or work in these areas
State income taxes can take a pretty significant bite out of your paychecks, and your city, county, or school district could take another chunk of your hard-earned cash if you live in certain states. As of 2019, 16 states allow city taxes, and counties can levy their own separate individual income taxes in addition to state income taxes as well.
Be ready to fork over income taxes to the federal government, the state, and the city if you live in these areas or, in some cases, if you even work there.
Two cities—Bessemer and Birmingham—levy an income tax of 1%. Gadsden's rate is 2%.
Seven Arkansas school districts assess an income tax surcharge equal to 10% of your state income tax before any tax credits are applied: Berryville, Green Forest, Westside, Hope, Huntsville, Waldron, and Marshall.
Three Colorado cities impose flat taxes on compensation. Aurora charges $2 per month on compensation over $250, Denver charges $5.75 per month on compensation over $500, and Greenwood Village charges $4 per month on compensation over $250.
Wilmington has a flat 1.25% tax on income. It's the same rate for both residents and nonresidents.
All 92 counties in Indiana have an individual income tax ranging from 1.5% in Vermillion County to 3.13% in Pulaski County.
Seven Indiana counties, including Vermillion, increased their tax rates in 2017. Allen County now levies an income tax at 1.48%, Clinton County at 2.25%, Fountain County at 2.1%, LaGrange County at 1.65%, Marion County at 2.02%, Sullivan County at .60%, and Vermillion County at 1.5%.
More than 660 school districts impose an income tax surcharge ranging from 1% to 20% of state income tax owed. Appanoose County also levies a 1% tax on income.
Eight cities in Kentucky levy income taxes on residents and nonresidents alike. They are: Bowling Green at 1.85%, Covington at 2.5%, Florence at 2%, Lexington-Fayette at 2.25%, Louisville at 2.20% for residents and 1.45% for nonresidents, Owensboro at 1.33%, Paducah at 2%, and Richmond at 2%.
Lexington-Fayette Urban County Government and Louisville-Jefferson County also impose taxes on businesses.
All 24 Maryland counties levy income taxes on residents and nonresidents. Tax rates range from 1.25% in Worcester County to 3.20% in Howard, Montgomery, and Prince Georges Counties.
Baltimore also has an income tax of 3.05%.
Several Michigan cities impose income taxes with rates ranging from 1.0% in 18 counties to 2% in Highland Park and 2.50% in Detroit. Detroit’s income tax rate for nonresidents is 1.25%.
Both Kansas City and St. Louis have an income tax of 1%. They call it an "earnings tax."
The city of Newark imposes a flat 1% tax on earned income.
Yonkers and New York City both have individual income taxes. New York City's income tax rates range from 2.907% to 3.648%. The Yonkers income tax rate is equal to 10% of your net state income tax after credits.
The New York City Metropolitan Transportation Authority levies a .34% tax for workers, and residents of the New York/New Jersey Waterfront pay a flat city rate of 2%.
In Ohio, 235 cities and 331 villages have an income tax, including Columbus, Toledo, Cincinnati, and Cleveland. Ohio law requires a flat rate that cannot exceed 1% unless it's approved by voters. Ohio local income tax rates range from 0.40% in Indian Hill to 2.5% in Parma Heights.
The Tri-Met Transit District, which includes Portland, assesses an income tax of 0.69%, and the Lane County Transit District, which includes Eugene, assesses a tax on earned income of 0.67%.
Multnomah County, home to Portland, also assesses a 1.45% business income tax.
Most municipalities in Pennsylvania assess a tax on wages. It's known as the "Earned Income Tax." This tax is usually split between the municipality and the local school district. As the name implies, the tax is only assessed on earned income, such as wages. Unearned income, including interest and dividends, are not taxed.
Pennsylvania state law limits the Earned Income Tax to a maximum flat rate of 2%, but Home Rule cities like Philadelphia and Scranton are not subject to this maximum. Pennsylvania cities with tax rates above 2% include Philadelphia at 3.93%, Pittsburgh at 3%, Reading at 3.6%, Scranton at 3.40%, and Wilkes-Barre at 3%.
Local income taxes are also assessed on the net profits of businesses.
Tax Foundation. "Local Income Taxes in 2019," Download "Download Local Income Tax Rates (XLSX)." Accessed April 2, 2020.
The City of St. Louis. "U.S. Cities That Levy Income (Earnings) Taxes." Accessed April 2, 2020.
State of Indiana. "Individual Income Tax Rates Change in Seven Counties." Accessed April 2, 2020.
Tax Foundation. "Local Income Taxes: City- and County-Level Income and Wage Taxes Continue to Wane." Accessed April 2, 2020.
Michigan Dept. of Treasury. "What Cities Impose an Income Tax?" Accessed April 2, 2020.