US City income taxes: New York, Philadelphia and The Rest

American income tax is usually described as federal plus state. For residents of a number of cities and counties there is a third layer, levied locally, and it can be the difference that decides a comparison.

Local income taxes are concentrated in a handful of states, notably Pennsylvania, Ohio, New York, Maryland, Michigan, Indiana and Kentucky. In most of the country they do not exist at all.

The notable cases

Place	Local charge	Who pays
New York City	A progressive city income tax on top of New York State tax	Residents of the five boroughs
Yonkers	A surcharge on New York State tax	Residents, with a smaller charge on non-resident earnings
Philadelphia	A wage tax at a flat rate	Residents wherever they work, and non-residents on work performed in the city
Most Pennsylvania municipalities	A local earned income tax, typically around 1%	Residents, collected through payroll
Ohio municipalities	Municipal income tax, commonly 2% or more	Residents and often those working in the municipality
Maryland counties	A county income tax collected with the state return	Residents by county of residence
Detroit and other Michigan cities	A city income tax with resident and non-resident rates	Residents and non-resident workers

The Philadelphia wage tax is the one with the widest reach, because it applies to residents on all earned income wherever it is performed and to non-residents on income earned within the city. Someone living in New Jersey and working in Philadelphia pays it.

New York is the largest combined burden

A resident of New York City pays federal income tax, New York State income tax with a progressive schedule reaching a high top rate, and the city income tax. Combined with FICA, the total deduction on a high salary in Manhattan is among the heaviest in the United States and comparable with parts of western Europe.

This is the single largest omission in most American salary comparisons. A 200,000 dollar offer in New York City and a 200,000 dollar offer in Austin, Texas produce net figures that differ by a substantial margin, and the federal calculation is identical in both.

Texas, Florida, Washington, Nevada, Tennessee, Wyoming, South Dakota, Alaska and New Hampshire levy no broad based personal income tax on wages. See the nine states with no income tax.
California, New York, New Jersey, Oregon, Minnesota and Hawaii sit at the heavier end of the state scale.
Local taxes add a further layer in a limited number of places, which do not correlate with state rates in any predictable way.
State and local taxes paid are deductible against federal income tax only within a capped amount, which reduced the offset that used to soften high state taxes.

Working in one place and living in another

Local taxes usually attach to residence, and sometimes to the place of work as well. Where both apply, credits generally prevent full double taxation but rarely eliminate it entirely.

Remote work complicated this considerably. Some jurisdictions apply a convenience of the employer rule, treating days worked at home for the employee's convenience as though they were worked at the employer's location. New York applies such a rule, which affects a large number of people who moved out of the state and kept their jobs.

The state level version of this problem is covered in state reciprocity agreements.

What to do with an offer

Ask for the work location and the likely residence separately, then look up the state rate and check whether the city or county levies anything. It takes minutes and it is the most common blind spot in comparing American offers.

The calculator on this site covers federal deductions, so state and local tax should be subtracted from the figure it produces.

Federal tax and FICA are the starting point. Use the US Salary Calculator and then subtract state and local tax for your location.