Local income taxes.

In plain English

Local income taxes are income taxes charged by a local government such as a city, county, or school district, separate from your state and federal income tax. They are common in some states and do not exist at all in others. The tax is often a small flat percentage of your wages and is usually withheld from your paycheck automatically. Some areas tax you based on where you live, some based on where you work, and a few charge both.

01Why it matters

A local tax can quietly shave a percentage off every paycheck, and moving a few miles into or out of a taxing city or district can change your annual tax bill.

02The math, step by step

Say a city charges a 1% local income tax and you earn $50,000 working there. That is about $500 a year, often taken straight out of your paychecks before you ever see it. Whether you owe depends on the city or county you live or work in, so check your local government's tax office.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT