Local Income Tax

A local income tax is a tax on wages charged by a city, county or school district on top of state income tax. Employers withhold it from paychecks where it applies. Most of the country has none.

Cities such as Philadelphia, Detroit and New York City tax residents' wages. Ohio, Pennsylvania, Michigan, Maryland, Indiana and Kentucky have many local taxes. Some apply only to residents, others to anyone who works there. Rates are set locally and can change from year to year.

On a pay stub it often shows with the city or county name, separate from state SWT. Read whether state tax comes out of your paycheck, and the methodology page explains how each type is figured.

Most workers have no local tax deducted from their paycheck at all. Where a city or county does tax wages, the amount taken out is usually a percent or two of taxable income, far less than the federal income tax and FICA on the same check.

New York City residents pay 3.078% to 3.876% of taxable income on top of state tax, and people who work in the city but live elsewhere do not pay it. Yonkers residents pay a surcharge of 16.75% of their New York State tax, and nonresidents who work in Yonkers pay 0.5% of wages earned there. Local tax shows on its own pay stub line, usually under the name of the city or a short local code.