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).
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%, 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 Sunset (Major Change)
The $10,000 SALT (State and Local Tax) deduction cap from the 2017 TCJA is scheduled to expire on December 31, 2025. Unless Congress extends it, 2026 returns to unlimited SALT deduction — a major win for high-tax-state residents.
Who benefits most:
- • High-income earners in CA, NY, NJ, IL who currently lose 2-5% of AGI to capped SALT
- • Homeowners with property tax + state income tax exceeding $10K
- • Itemizers (about 12% of filers — itemizing made less common after 2017 standard deduction increase)
If Congress extends the cap (likely outcome under various proposed bills), no change. If it sunsets fully, expect blue-state legislators to push for additional state-level workarounds beyond existing PTE (pass-through entity) tax mechanisms now active in 36 states.
Calculate Your Local + State Tax
Use our state and local tax calculators to estimate your exact 2026 burden: