Local income taxes are required in over 5,000 jurisdictions across 16 states, and the filing process depends entirely on where you live and work. In some states, local taxes are rolled into your state return automatically. In others, you need to file a completely separate return with a local tax collector you may never have heard of. Here’s how to figure out what applies to you and get it done.
Check Whether You Owe Local Taxes
Most Americans don’t owe local income taxes at all. Only 16 states have jurisdictions that impose them: Alabama, Colorado, Delaware, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, and West Virginia. Within those states, not every city or county levies a local tax, so living in one of these states doesn’t automatically mean you owe.
The fastest way to check is to look at your pay stub. If your employer is withholding a local or municipal income tax, you likely need to file a local return. You can also search your city or county’s government website for tax information, or check with your state’s department of revenue. In states like Ohio and Pennsylvania, where thousands of municipalities levy their own taxes, this step is especially important because rates and rules vary from one town to the next.
Local taxes can apply based on where you live, where you work, or both. If you live in one taxing jurisdiction and commute to a job in another, you may owe taxes to both, though many localities offer credits so you aren’t fully double-taxed on the same income.
Determine How Your Local Tax Is Filed
The biggest source of confusion with local taxes is that they don’t all work the same way. How you file depends on which state you’re in, and the differences are significant.
Piggyback States: Filed With Your State Return
In Indiana, Iowa, Maryland, and New York, local income taxes piggyback on the state income tax. This means you report and pay your local tax directly on your state tax return. You use the same deductions and exemptions as your state filing, and no separate local form is required. If you use tax software or a paid preparer for your state return, the local portion is handled automatically. This is the simplest version of local tax filing.
The Portland, Oregon metro region also uses a piggyback structure, though it only applies to households earning above certain income thresholds.
Separate Filing States: You Need a Local Return
In Alabama, Delaware, Kentucky, Missouri, Ohio, Oregon, and Pennsylvania, local taxes are treated as entirely separate from your state income tax. You’ll need to file an additional return directly with your local taxing authority, using their specific forms and instructions. These are typically earnings or payroll taxes, meaning they apply to wages and self-employment income rather than investment income or retirement distributions.
Michigan localities also require separate local forms and calculations, even though the state handles some administrative aspects.
States like Colorado, Kansas, New Jersey, and West Virginia use various combinations of state and local administration, so check your specific municipality’s requirements.
Find Your Local Tax Collector
In states where you file a separate local return, figuring out where to send it can be the trickiest part. Unlike federal and state taxes, which go to well-known agencies (the IRS and your state revenue department), local taxes often go to third-party collection bureaus or small municipal offices.
In Pennsylvania, for example, local income tax is managed through Tax Collection Districts, each assigned to a specific collection agency. Major collectors include Keystone Collections Group, Berkheimer Tax Administrator, York Adams Tax Bureau, and Berks Earned Income Tax Bureau. Your employer should be able to tell you which collector handles your jurisdiction, and your municipality’s website will list it as well. Philadelphia operates its own system entirely through the city’s Department of Revenue.
In Ohio, many cities use the Regional Income Tax Agency (RITA) or CCA (Central Collection Agency), while others collect taxes directly. Your W-2 should show the local tax withheld and the municipality code, which helps you identify the right collector.
Once you’ve identified the correct agency, visit their website. Most local collectors now offer electronic filing, downloadable forms, and online payment options. Some smaller jurisdictions still require paper returns mailed to a local office.
Gather What You Need to File
Local tax returns are generally simpler than federal or state returns, but you still need a few key documents:
- W-2 forms: Your W-2 shows local wages and any local tax already withheld by your employer. Box 18 reports local wages, Box 19 shows local tax withheld, and Box 20 identifies the locality.
- Self-employment records: If you’re self-employed, most local taxing jurisdictions tax net self-employment earnings. You’ll need your federal Schedule C or Schedule SE figures.
- Proof of residency: Some jurisdictions need your address to determine which tax district you fall under, especially if you moved during the year.
- Prior year local returns: If you’ve filed before, having last year’s return handy helps with account numbers and carryover credits.
If your employer withheld the correct amount of local tax throughout the year, your local return may simply confirm that no additional payment is due. If you’re self-employed or your employer didn’t withhold local taxes (common for remote workers or people who work across jurisdictional lines), you’ll likely owe a balance when you file.
Remote Workers and Multiple Jurisdictions
Remote work has made local taxes more complicated. The general rule is that you owe local income tax where you physically perform the work. If you work from home, that’s your home jurisdiction. If you commute to an office in a different city, that city may also claim taxing rights.
A few states take a different approach, taxing wages based on the location of the employer’s office to which you’re assigned rather than where you physically sit. This “convenience of the employer” rule can mean you owe local taxes to a jurisdiction you rarely or never visit.
When two jurisdictions both claim the right to tax the same income, look for reciprocity agreements or tax credits. Many localities allow you to credit taxes paid to your work city against what you owe to your home city, reducing or eliminating double taxation. The specifics vary by jurisdiction, so check both your home and work municipality’s tax rules.
Deadlines and Penalties
Most local tax returns follow the same April 15 deadline as federal taxes, though some jurisdictions set their own dates. If you get a federal extension, it doesn’t always extend your local filing deadline automatically. Check with your local collector to confirm whether you need to request a separate extension.
Penalties for late filing or nonpayment vary by jurisdiction but typically include both a flat penalty and interest on unpaid balances. Some municipalities are aggressive about collections, adding liens or garnishing wages for unpaid local taxes. Because many people don’t realize they owe local taxes in the first place, it’s not uncommon to receive a notice for a tax you didn’t know existed, particularly after moving to a new area.
Using Tax Software for Local Returns
Major tax software programs handle local taxes well in piggyback states, since the local tax is just a line on your state return. For separate-filing jurisdictions, coverage is more uneven. Some programs generate local returns for larger cities but not for every small municipality.
If your tax software doesn’t support your specific locality, you’ll need to file the local return on your own. Visit your local collector’s website for the appropriate form, fill it out using the wage and withholding information from your W-2, and submit it by the deadline. Many local returns are only one or two pages and take 15 to 30 minutes to complete if your tax situation is straightforward.
For self-employed filers or people who live and work in different taxing jurisdictions, the local return gets more involved. In these cases, working through the local collector’s instructions carefully, or having a tax preparer familiar with your area handle it, can save you from errors that trigger notices down the road.