News & Trending Tax News

9 States Where Local Taxes Take a Big Bite From Your Paycheck

Local taxes here might be eating up more of your income than you realize.

neighborhood with residential houses and driveways
Updated Oct. 13, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Residents of some states face high local tax rates in addition to any federal and state taxes they might pay.

About one-third of states let municipalities, counties, and other bodies — such as school districts — impose extra income taxes.

If you're concerned that paying extra taxes will hamper your efforts to get ahead financially, you might want to avoid living in the following states, where local taxes can take a bigger bite out of your paycheck.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today”
  • Create your account (important!) by answering a few simple questions
  • Start enjoying your discounts and perks!

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

Maryland

kuosumo/Adobe annapolis maryland main street

Local taxes are difficult to avoid in Maryland. All 23 counties in the state have an income tax, with rates ranging from 2.25% to 3.2%. Baltimore also has its own 3.2% tax.

Maryland also imposes a 6% sales tax on all purchased goods and services.

Kentucky

Michael K Greer/Wirestock Creators/Adobe louisville city skyscrapers surrounded by bridges and greenery

Most counties in Kentucky impose income taxes. Rates range from a tiny 0.01% to a more robust 2.5%.

Fortunately, state income taxes in Kentucky are relatively low. The state imposes a 4.5% flat tax on income.

Ohio

Francis/Adobe Cleveland Ohio during day time

Of the more than 400 municipalities in Ohio, the vast majority have income taxes that range between 0.5% and 3%. A handful do not levy income taxes.

Ohio’s state income tax is graduated based on income and ranges from 2.75% to 3.5%.

Resolve $10,000 or more of your debt

Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.

National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1

How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.

Try it

New York

THANANIT/Adobe statue of liberty during day time over new york city scape

New York is notorious for its high state income tax rates, which range from 4% to 10.9%. Both New York City and Yonkers also charge income taxes.

New York City’s local income tax is income-dependent and ranges from 3.078% to 3.876%. Yonkers has a personal income tax surcharge of 16.75%.

Pennsylvania

checubus/Adobe beautiful Pittsburgh at sunset

Many municipalities in Pennsylvania charge an earned income tax on wages that ranges from 1% to 3.6% for the state's residents.

However, Pennsylvania also has a low flat-tax rate of 3.07% on income. And retirees catch a bit of a break if they live in the Keystone State: Pennsylvania is among the many states that don't impose taxes on Social Security.

Michigan

Michael Deemer/Adobe marina at mackinac island

Many cities in Michigan charge an income tax on incomes, usually at a rate of 1%.

However, rates are higher in other cities. For example, in Detroit, the tax is 2.4% for residents and 1.2% for nonresidents.

Indiana

SeanPavonePhoto/Adobe iconic indianapolis roundabout with skyline

All 92 counties in Indiana charge a tax on income, with rates ranging from 1% to 2.864%.

Out of all of the states in America, Indiana is one of two that has local income taxes in every county. The other state is Maryland.

Colorado

Kevin Ruck/Adobe vail colorado

In Colorado, five cities impose a flat tax on income in which residents pay a specific dollar amount from each paycheck.

These cities are Aurora, Denver, Glendale, Greenwood Village, and Sheridan. The taxes are relatively modest, ranging from $2 a month in Aurora to $5.75 a month in Denver.

West Virginia

Jerry/Adobe West Virginia Capitol Building

West Virginia is another state that imposes a flat income tax on residents of larger cities. It differs from Colorado in that West Virginians are charged per paycheck rather than per month.

West Virginia has four cities that charge this type of tax: Charleston, Huntington, Parkersburg, and Weirton.

Earn cash back on everyday purchases with this rare account

Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2

With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!

This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.

Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.

Apply for a Discover Cashback Checking account today

Bottom line

Delmaine Donson/peopleimages.com/Adobe couple booking vacation using laptop

Before you move, do your research on taxes. Local taxes can take an extra bite out of your earnings, making it tougher to keep more money in your pocket.

You may find yourself grateful that you took the time to understand where local taxes are high so you can avoid excessive taxation.

Lucrative, Flat-Rate Cash Rewards

5.0
info

Wells Fargo Active Cash® Card

Current Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

Rewards Rate

Earn unlimited 2% cash rewards on purchases

Benefits and Drawbacks
Card Details


Author Details

Cameron Diiorio

Cameron Diiorio is a personal finance writer based out of Southern California. She primarily covers general financial topics with a focus on Gen Z and the electric vehicle market.