Local income tax by state (2026)

City wage taxes carry the biggest local bills

Philadelphia has the heaviest local wage tax in the country and the one most likely to surprise a new arrival. A resident pays 3.735% of gross compensation with no cap and no bracket, and the rate steps down every July 1 under a five-year schedule the city publishes in advance. New York City works the other way: graduated brackets, three separate schedules by filing status, and the whole thing applies to residents of the city.

Ohio and Michigan spread the same idea across many more places. An Ohio municipal tax is owed to the city where the work was performed, and the city you sleep in usually taxes those wages too, then credits you for what the work city took under a rule it sets itself. That credit does not exist at all in 2 Ohio cities, whose residents pay both bills in full. Michigan is simpler and unusually predictable: the Uniform City Income Tax Ordinance fixes the nonresident rate at exactly half the resident rate in every taxing city, so one published number describes the entire arrangement.

Three more states run a city wage tax on a smaller footprint. Kansas City and St. Louis each levy a 1% earnings tax and are the only two Missouri cities permitted to. Alabama's occupational license fees follow the work rather than the worker, so a nonresident who commutes in pays and a resident who commutes out does not. Wilmington is the sole Delaware municipality with a wage tax, and its rate is set by the state legislature rather than by the city, so it moves rarely.

Counties and school districts collect the rest

Indiana runs the broadest county tax in the country. All 92 of its counties levy one, the rate follows the county you lived in on January 1 rather than where you work, and a nonresident working in the county pays exactly what a resident pays. There is no half-rate split and no work-county question, which makes Indiana the easiest state here to model and the easiest one to forget about.

Maryland's county tax behaves like a second state tax. It is imposed on your county of residence, computed on Maryland taxable net income, and collected on the state return, so no employer has to work out a work-city rate. All 24 jurisdictions levy one, the 23 counties plus Baltimore City. Most are flat; Anne Arundel and Frederick publish graduated schedules instead.

Iowa and Yonkers share a mechanism that looks nothing like a wage tax. Both charge a percentage of the income tax you already owe your state rather than a percentage of your wages, so the local bill rises and falls with your state bracket. Iowa sets a surtax per school district and reissues the table every year. Plenty of districts sit at zero, the Des Moines public schools among them, and the figure carried here is the last one the department published, because its table for the current year is not out yet. Yonkers takes 16.75% of state income tax from a resident.

Oregon's local taxes start above an income threshold

Portland-area workers face two separate taxes, and neither one touches a modest salary. Multnomah County's Preschool for All tax charges 1.5% to 3% above $125,000 for a single filer and 1.5% to 3% above $200,000 on a joint return. The regional Metro Supportive Housing Services tax adds 1% above $128,000 single, 1% above $205,000 joint, and its thresholds became inflation-indexed in 2026, which is why the two no longer line up.

Two details make the Oregon pair unlike anything else in this guide. Both are levied on Oregon taxable income from the state return rather than on gross wages, and employer withholding is mandatory only above $200,000 of wages and elective below that, so someone in range can owe the tax without ever seeing it come out. This calculator applies both to its own income base as a wage-side approximation, and that simplification is recorded in our gap ledger rather than left implied.

Residents and nonresidents rarely pay the same rate

Assume one rate per city and you will be wrong in 12 of the jurisdictions modelled here, each of which publishes a separate, lower figure for people who work there and live elsewhere. Philadelphia charges a nonresident 3.425% against the 3.735% a resident pays. Louisville drops from 2.2% to 1.45%, because the school-district share does not follow a nonresident out of the county. The other 10 are Michigan cities on the statutory half: Detroit's 2.4% becomes 1.2%.

Plenty of jurisdictions publish no split, and that is a fact rather than an omission. Ohio charges a nonresident the same rate it charges a resident, and Indiana's single-rate structure does the same. Wilmington applies one rate to everybody by design. Yonkers is the one gap worth naming here: it levies a 0.5% earnings tax on nonresidents who work in the city, this calculator models the resident surcharge only, and a Yonkers commuter is therefore under-charged rather than over-charged.

A reciprocity agreement does not cover local tax

This is the mistake that costs the most money, and it is easy to make because the paperwork feels complete. A reciprocity agreement removes the work state's income tax from a commuter's wages and removes nothing else. City and county levies are imposed under separate authority, so they survive the agreement untouched. Live in New Jersey and work in Philadelphia and you owe Pennsylvania no state income tax at all, while the Philadelphia wage tax comes out of every check at the nonresident rate. Indiana behaves the same way: the exemption certificate covers state tax and leaves the county tax standing.

The reverse trap is just as common. A commuter whose state withholding is genuinely zero can still owe several thousand dollars locally, so a take-home estimate that stops at the state line is nowhere near finished. Which pairs of states have an agreement, and what each one actually exempts, is set out in the state tax reciprocity guide.

Your 401(k) may not reduce your local tax

Most local taxes ride on the same wage figure the state starts from, so a pre-tax contribution that cuts your state bill cuts the local one with it. Pennsylvania is the exception, and it is a large one. The state taxes an employee's 401(k) deferral at the moment it is made, and Act 32 municipal earned income tax and the Philadelphia wage tax are levied on that same pre-deferral compensation. A Philadelphian filling a 401(k) to the annual limit reduces exactly one line on the pay stub, and it is the federal one. What each state does with a 401(k), an HSA and an FSA is set out in the guide to state tax on pre-tax contributions.

Alabama's ordinances say the same thing about their occupational tax: compensation there expressly includes an amount an employee elects to defer under a 401(k) or 403(b), while Section 125 cafeteria amounts stay out of it. This calculator does not yet apply that rule, because the deferral base is modelled per state rather than per jurisdiction, so a Birmingham filer who defers is under-charged rather than over-charged. It is a real gap, we publish it as one, and it runs in the safer direction.