Ask someone their tax rate and they will quote a federal bracket. Some will know their state rate. Almost nobody can tell you their local income tax rate — yet for millions of workers, that forgotten third layer is the difference between the paycheck they expected and the one they actually get.
Where local income taxes actually live
They are more common than the national conversation suggests. New York City withholds its own income tax on top of New York State's — over 3.8% at the top. Every one of Indiana's 92 counties levies its own rate. Ohio's cities tax both residents and the commuters who only work there. Add Detroit, Baltimore, Philadelphia, Pittsburgh, St. Louis, Kansas City, Louisville, Wilmington, Birmingham, and hundreds of smaller jurisdictions across Kentucky, Michigan, Missouri, Pennsylvania, Alabama, Delaware and Maryland, and "local tax" stops being an edge case.
Pennsylvania alone has thousands of local taxing jurisdictions, most charging a flat earned-income tax around 1%. Ohio has over 600 municipal rates. If you live or work in the Midwest or Mid-Atlantic, there is a good chance a local tax applies to you right now.
Resident vs. work-city: the commuter trap
- Some cities tax residents no matter where they work (Detroit, Philadelphia).
- Some tax anyone who works inside the city limits, resident or not (many Ohio municipalities).
- Some do both, with a partial credit so you are not fully taxed twice — the credit is where most mistakes happen.
- Remote workers: your home city and your employer's city can both claim a slice. Check both.
Why your estimate was too optimistic
Most online paycheck calculators stop at the state line, so their "net pay" quietly assumes the local line is zero. In Yonkers that is 1.95% wrong; in New York City, nearly 4% wrong; in Detroit, 2.4% wrong. On a $75,000 salary, a 2% local tax is $1,500 a year — real money that a state-only calculator simply never shows you.
That gap is exactly why we built the city guides: each of our 65 city pages loads the calculator with the correct 2026 local rate already applied, and every state calculator offers a locality dropdown for the major taxing jurisdictions. If your stub has a line you do not recognize — "LST," "EIT," "city tax," a county code — that is the number to check.
One-minute audit
Pull your latest paystub and find the local withholding line. Then open your city or state calculator here and compare. If the numbers are close, your withholding is honest. If the stub shows a local tax and the calculator you were using before never mentioned it — you have just found the leak.