Taxes State Taxes States With Local Income Taxes You'll take a bit of a tax hit if you live or work in these areas By Tonya Moreno, CPA Updated on January 5, 2023 Reviewed by Lea D. Uradu In This Article View All In This Article Alabama, Colorado, Delaware, and Indiana Iowa, Kansas, Kentucky, Maryland, and Michigan Missouri, New Jersey, New York, and Ohio Oregon, Pennsylvania, and West Virginia Frequently Asked Questions (FAQs) Photo: Karl Hendon / Getty Images 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. Roughly one-third of states allow municipalities, counties, school districts, and special districts to impose additional local income taxes. Some localities call them different names, such as earnings taxes or wage taxes, and some have much higher rates than others. Key Takeaways 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 Iowa has hundreds of school districts who levy income taxes.Most jurisdictions tax nonresidents who work there at a lower rate. Kansas doesn’t tax nonresidents at all. Alabama 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. Colorado Five Colorado cities impose an income tax as a flat dollar amount on compensation earned by both residents and nonresidents. It's called an occupational privilege tax and is charged to employees who work within city limits. (Employers also pay the tax, but that amount may be different from the tax owed by the employee.) Aurora: $2 per month on employers and employees who work within the city limitsDenver: $5.75 per monthGlendale: $5 per monthGreenwood Village: $2 per monthSheridan: $3 per month Delaware Only Wilmington levies a local income tax in this state. It's a flat 1.25% on earned income. It's the same rate for residents and nonresidents. Indiana All 92 counties in Indiana have an individual income tax, ranging from 1% in several counties to 2.864% in Jasper County. Allen County, the largest 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 October 2022. Iowa 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 income tax you pay (not 20% of your income). Appanoose County also levies a 1% "emergency services" surtax on income. Kansas There are 484 local taxing jurisdictions in Kansas, including counties, cities, and townships. Rates range from 0.13% to 5.75%. Kentucky Most of Kentucky's jurisdictions impose income taxes. Rates range from 0.01% in Elsmere, Hart County, and Spencer County to 2.5% in Bellevue, Covington, Newport, and Southgate as of 2022. Maryland All 23 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, and Wicomico Counties in 2022. The city of Baltimore also has an income tax of 3.20%. Michigan Several Michigan cities imposed 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 nonresidentsGrand Rapids: 1.5% on residents, 0.75% on nonresidentsHighland Park: 2.0% on residents, 1.0% on nonresidentsSaginaw: 1.5% on residents, 0.75% on nonresidents Missouri Kansas City and St. Louis have an income tax of 1%. They call it an "earnings tax." Both cities charge nonresidents the same rate. New Jersey 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. New York 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. Ohio There are 418 municipalities in Ohio. Eight don't charge any income taxes. The other 400 charge between 0.50% and 3% as of 2022. Oregon The greater Portland area (Metro) imposes a 1% personal income tax for individuals with Metro taxable income over $125,000 ($200,000 if married filing jointly). Multnomah County has a 1.5% tax on those same income groups, with an additional 1.5% tax on Multnomah income over $250,000 or $400,000 for joint filers. The Lane County Transit District, which includes Eugene, assesses a tax on earned income of 0.01% on residents and nonresidents alike as of 2022. Pennsylvania 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 3.79% 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 West Virginia has four taxing jurisdictions. They charge a flat dollar rate, not a percentage: Charleston: $6 per pay periodHuntington: $10 per pay periodParkersburg: $5 per pay periodWeirton: $2 per week Note Those who are paid weekly in these areas suffer the greatest burden: $1,040 a year in Huntington. Someone who is paid monthly in Charleston would pay $72. 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, and Washington taxes the capital gains and income of people with high incomes. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Tax-Rates.org. "2022 Bessemer, Alabama Local Income Tax." City of Aurora. "Occupational Privilege Tax." City of Denver. "Business Taxes." Occupational Privilege Tax dropdown menu. City of Glendale, Colorado. "Occupational Privilege Tax." Greenwood Village, Colorado. "Occupational Privilege Tax." Sheridan, Colorado. "Occupational Privilege Tax." New Castle County Delaware. "City of Wilmington Wage Tax Information." Indiana Department of Revenue. "Departmental Notice #1," Page 4. FreeTaxUSA. 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