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![]() Local income taxes arose during the Great Depression: declining property tax revenues caused by rising foreclosures forced local governments to look for other ways to raise revenue. Three municipalities in West Virginia impose service taxes of $2 to $3 per week per employee. New Jersey has only one local income tax in Newark. ![]() Kansas local income taxes are limited to interest, dividend, and securities transaction income. In Colorado, Denver and two other municipalities impose charges of $2 to $4 per month per employee, again a modest amount compared with overall Colorado income. San Francisco, California imposes a payroll tax of 1.5% on approximately 6,000 businesses with payrolls of larger than $250,000 the tax collected $342 million in 2010. Census Bureau as local income taxes and/or amount to less than 0.01% of state personal income. (a) Collections from limited local income taxes in California, Colorado, Kansas, New Jersey, Oregon, and West Virginia are either not reported to the U.S. Table and report do not include the District of Columbia, which has a top individual income tax rate of 8.5 percent. Census Bureau and income data from the Bureau of Economic Analysis. Source: Tax Foundation calculations based on tax collections data from the U.S. Table 1: Local Income Tax Collections as a Percent of State Personal Income, 2008 StateĪverage Local Income Taxes as a Percent of Total Income Many cities and school districts in Iowa and Michigan also have these taxes. 2,469 municipalities and 469 school districts in Pennsylvania impose local income or wage taxes. In Ohio, 593 municipalities and 181 school districts have such a tax. Varying from minute amounts in several states to an average 1.55 percent in Maryland (see Table 1), these taxes provide a long-standing and significant source of revenue to many cities in “Rust Belt” states in the northeastern United States.Īll counties in Indiana and Maryland impose a local income tax (see Table 2). cities and counties do not impose a local income tax, but they are imposed by 4,943 jurisdictions in 17 states, encompassing over 23 million Americans. ![]() 280: Local Income Taxes: City- and County-Level Income and Wage Taxes Continue to Wane Introduction ![]()
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