Direct answer: 17 US states authorize local (city or county) income tax in 2026: Alabama, Arkansas, California (San Francisco only), Colorado, Delaware, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Missouri, New York, Ohio, Oregon, Pennsylvania, West Virginia, plus the District of Columbia. The remaining 33 states — including Florida, Texas, New Jersey, Minnesota (where Fridley is located), Illinois, and Georgia — do NOT permit municipalities to levy income tax. Local income tax rates range from $2/month (Colorado occupational privilege tax) to 3.876% (New York City residents earning over $50,000).
City-specific checks: Fridley Minnesota local income tax confirms no city or county income tax, while Kettering Ohio city income tax leads with the 2.25% municipal rate before Ohio state tax, FICA, sales tax, and parcel-level property-tax verification.
Source Review: Local Income Tax and SALT Rules
Local income tax is highly jurisdiction-specific. Verify city, county, school district, and employer-withholding rules with official state or municipal sources before filing.
Key Facts (2026)
- • 17 states authorize local income tax: AL, AR, CA, CO, DE, IN, IA, KS, KY, MD, MI, MO, NY, OH, OR, PA, WV (plus DC)
- • 33 states do not allow any local income tax — including FL, TX, NJ, MN, IL, GA, NC, AZ, NV, WA, etc.
- • Highest local rate: NYC at 3.876% on residents earning over $50K
- • Most jurisdictions: Pennsylvania (~2,500 municipalities), Ohio (~600), Indiana (92 counties)
- • Remote work trap: 6 cities apply "convenience of the employer" rule — work from home, still owe city tax
The 17 States With Local Income Tax (2026)
| State | Local Rate Range | Key Jurisdictions | Notes |
|---|---|---|---|
| Alabama | 0.5%–2% | Birmingham, Macon, Bessemer | Occupational license tax |
| Arkansas | N/A as of 2026 | — | Authority exists, no city using |
| California | 1.18%–1.5% | San Francisco only (Payroll Expense Tax) | Employer tax, not employee |
| Colorado | $2/mo flat | Aurora, Denver, Glendale, Greenwood Village, Sheridan | Occupational privilege tax |
| Delaware | 1.25%–1.85% | Wilmington | Resident + non-resident workers |
| Indiana | 0.5%–3.38% | All 92 counties | County, not city. Marion 2.02% |
| Iowa | 0.5%–7% | ~280 school districts | School district surtax |
| Kansas | 0.75% | Wichita (intangibles tax only) | Limited scope |
| Kentucky | 0.45%–2.5% | Louisville (2.2%), Lexington (2.25%) | Occupational license fee |
| Maryland | 2.25%–3.2% | All 23 counties + Baltimore City | Highest: Howard, Mont., PG counties |
| Michigan | 1%–2.4% | Detroit (2.4%), Grand Rapids (1.5%), Lansing (1%) | 22 cities total |
| Missouri | 1% | Kansas City, St. Louis | Earnings tax |
| New York | 2.907%–3.876% | NYC (5 boroughs), Yonkers (1.65%) | NYC graduated brackets |
| Ohio | 0.5%–3% | 600+ municipalities. Cleveland 2.5%, Columbus 2.5%, Kettering 2.25%, Cincinnati 1.8% | RITA + CCA admin systems |
| Oregon | 0.6%–1% | Portland Metro (Mult/Wash/Clack), Lane Transit, TriMet | Transit + supportive housing |
| Pennsylvania | 0.5%–3.75% | Philadelphia (3.75%), Pittsburgh (3%), Scranton (3.4%) + 2,500 municipalities | Earned Income Tax (EIT) |
| West Virginia | $2–$4/wk flat | Charleston, Huntington | City service fee |
States WITHOUT Local Income Tax
If you live in any of these states, you owe federal + state income tax only — no city or county on top. This includes some popular relocation destinations:
No State Income Tax (9 states)
Alaska, Florida, Nevada, New Hampshire (interest/dividends only through 2025), South Dakota, Tennessee, Texas, Washington, Wyoming. Plus no local income tax.
State Tax Only, No Local (24+ states)
AZ, CT, GA, HI, ID, IL, LA, ME, MA, MN, MS, MT, NE, NJ, NM, NC, ND, OK, RI, SC, UT, VT, VA, WI. Includes Minnesota (Fridley, Minneapolis) and New Jersey.
The 6 Cities With "Convenience of the Employer" Rules
If you work for an employer in one of these cities but live elsewhere, you may owe their city tax even when working from home — unless you can prove the remote work was for the employer's convenience (not yours). This is a major remote-work tax trap.
- 1. Philadelphia, PA — 3.75% city wage tax for residents, 3.44% for non-residents working in the city. Convenience rule applies post-pandemic.
- 2. Cleveland, OH — 2.5% city tax. Ohio Tax Code §718 grants cities tax authority on remote workers when work is for employee's convenience.
- 3. Cincinnati, OH — 1.8% city tax. Same Ohio §718 rules.
- 4. Columbus, OH — 2.5% city tax. Same.
- 5. New York City, NY — Different mechanism: NY State convenience rule applies to non-resident workers of NY-based employers.
- 6. Detroit, MI — 1.2% non-resident rate when work is allocated to Detroit office. 2.4% for residents.
Reciprocity Agreements (Where You Don't Pay Twice)
17 reciprocity agreements eliminate double taxation when you live in one state but work in another. The agreement says: only your home state taxes you. Without reciprocity, you typically file in both states and claim a credit. Reciprocal pairs (2026):
- • D.C. ↔ All neighboring states (file in your home state only)
- • Maryland ↔ DC, PA, VA, WV
- • Pennsylvania ↔ IN, MD, NJ, OH, VA, WV
- • Virginia ↔ DC, KY, MD, PA, WV
- • Indiana ↔ KY, MI, OH, PA, WI
- • Michigan ↔ IL, IN, KY, MN, OH, WI
- • Ohio ↔ IN, KY, MI, PA, WV
- • New Jersey ↔ PA only (special — NJ residents do NOT pay PA tax on PA-source wages)
Important: Reciprocity covers state income tax only, NOT local. A NJ resident working in Philadelphia still owes Philadelphia's 3.44% non-resident wage tax even though state-level income is taxed by NJ alone.
2026 SALT Deduction Cap Increase (Major Change)
The One Big Beautiful Bill Act raised the federal SALT (State and Local Tax) deduction cap for 2026 to $40,400 for most filers and $20,200 for married filing separately. The cap phases down for taxpayers with modified AGI above $505,000, but it cannot drop below the old $10,000 floor.
Who benefits most:
- • High-income earners in CA, NY, NJ, IL who previously lost 2-5% of AGI to the old $10K cap
- • Homeowners with property tax + state income tax exceeding $10K but below the new phase-down range
- • Itemizers (about 12% of filers — itemizing made less common after 2017 standard deduction increase)
The higher cap is scheduled through 2029 before reverting in 2030 absent new legislation. Existing PTE (pass-through entity) tax mechanisms remain useful for business owners because they can move some state tax from the individual Schedule A cap to an entity-level deduction.
Calculate Your Local + State Tax
Use our state and local tax calculators to estimate your exact 2026 burden: