State income taxes can really take a bite out of your paycheck. And if you live in certain states, your city, county, or school district could take another chunk of your hard earned cash. Fourteen states and the District of Columbia allow cities, counties, and municipalities to levy their own separate individual income taxes in addition to state income taxes. If you live in these areas or are thinking of moving to these areas, be ready to fork over income taxes to the federal government, the state, and the city:
- Alabama: Birmingham levies an income tax of 1%
- Arkansas: Seven Arkansas school districts assess an income tax surcharge equal to 10% of state income tax before tax credits. They are: Berryville, Green Forest, Westside, Hope, Huntsville, Waldron, and Marshall.
- Colorado: Three 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.
- District of Columbia: D.C. has a bracketed income tax system. The rates are 4% for the first $10,000 of income, 6% for $10,000 to $40,000 of income, and 8.5% for income over $40,000.
- Delaware: Wilmington has a flat 1.25% tax on income.
- Iowa: 666 school districts impose an income tax surcharge ranging from 1% to 20% of state income tax owed.
- Indiana: All 92 counties in Indiana have an individual income tax. Tax rates are in the process of being changed, and will be announced on the Indiana Department of Revenue’s website once they are finalized.
- Kentucky: Eight cities in kentucky levy income taxes on residents and non-residents. They are: Bowling Green (1.85%), Covington (2.5%), Florence (2%), Lexington-Fayette (2.25%), Louisville (2.20% for residents and 1.45% for non-residents), Owensboro (1.33%), Paducah (2%), and Richmond (2%). Lexington-Fayette Urban County Government and Louisville - Jefferson County also impose taxes on businesses.
- Maryland: All 24 Maryland counties levy income taxes on residents and non-residents. Tax rates range from 1.25% to 3.20%. Baltimore also has an income tax of 3.05%.
- Michigan: Several Michigan cities impose income taxes with rates ranging from 0.50% to 2.50%. Detroit’s income tax rate is 2.50% for residents and 1.25% for non-residents.
- Missouri: Both Kansas City and St. Louis have an income tax of 1%.
- New York: Yonkers and New York City both have individual income taxes. New York City's income tax rates range from 2.907% to 3.648%. Yonker's income tax rate is equal to 10% of your net (after credits) state income tax.
- Ohio: 235 cities and 331 villages in Ohio have an income tax, including Columbus, Toledo, Cincinnati, and Cleveland. Ohio law requires a flat rate that cannot exceed 1%, unless it is approved by the voters. Ohio local income tax rates range from 0.40% in Indian Hill to 3% in Parma Heights.
- Oregon: The Tri-Met Transit District (includes Portland) assesses an income tax of 0.6318% and the Lane County Transit District (includes Eugene) assesses an income tax of 0.60%. Multnomah County (Portland) also assesses a 1.45% business income tax.
- Pennsylvania: Most municipalities in Pennsylvania assess a tax on wages, known as the Earned Income Tax. This tax is usually split between the municipality and the local school district. The local Earned Income Tax is only assessed on earned income, like wages. Unearned income like 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. Cities with tax rates above 2% include: Philadelphia (3.98%), Pittsburgh (3%), Reading (2.70%), Scranton (3.40%), and Wilkes-Barre (2.85%). Non-residents have to pay the Earned Income Tax as well, but are usually taxed at a lower rate. You can look up local tax rates on Pennsylvania state's website. Local income taxes are also assessed on the net profits of businesses.
More information: The Tax Foundation has created a table of all local income tax rates for residents and non-residents.