City Income Taxes: The Deduction Most Salary Calculators Miss
Most salary calculators stop at federal and state tax. In 9 states that leaves a real deduction out of the arithmetic: cities and counties that levy their own income tax on top of everything else. On a $62,400 salary the difference between living inside and outside one of these municipalities can be over $1,872 a year.
The most expensive municipalities
Ranked by effective rate at a $62,400 salary. Most cities charge a flat rate; a few, New York City among them, run their own graduated brackets, so their effective rate shifts with income.
| City | State | Effective rate | Annual cost at $62,400 |
|---|---|---|---|
| Philadelphia | Pennsylvania | 3.74% | $2,331 |
| New York City | New York | 3.68% | $2,294 |
| Scranton | Pennsylvania | 3.40% | $2,122 |
| Baltimore City | Maryland | 3.20% | $1,997 |
| Montgomery County | Maryland | 3.20% | $1,997 |
| Prince George's County | Maryland | 3.20% | $1,997 |
| Howard County | Maryland | 3.20% | $1,997 |
| Baltimore County | Maryland | 3.20% | $1,997 |
| Reading | Pennsylvania | 3.10% | $1,934 |
| Harford County | Maryland | 3.06% | $1,909 |
Which states allow it
Local income tax is not a national feature — it is a state-by-state permission. These are the states where it applies, and the cities the calculator models:
Alabama — Birmingham (1.00%), Montgomery (1.00%), Gadsden (2.00%), Macon County (1.00%). Calculate Alabama take-home pay
Indiana — Marion County (Indianapolis) (2.02%), Lake County (1.50%), Allen County (Fort Wayne) (1.59%), Hamilton County (1.10%), St. Joseph County (1.75%), Vanderburgh County (Evansville) (1.25%). Calculate Indiana take-home pay
Kentucky — Louisville (2.20%), Lexington (2.50%), Covington (2.50%), Bowling Green (1.85%), Owensboro (1.50%). Calculate Kentucky take-home pay
Maryland — Baltimore City (3.20%), Montgomery County (3.20%), Prince George's County (3.20%), Howard County (3.20%), Anne Arundel County (2.75%), Baltimore County (3.20%), Harford County (3.06%), Frederick County (2.59%), Worcester County (2.25%). Calculate Maryland take-home pay
Michigan — Detroit (2.40%), Grand Rapids (1.50%), Saginaw (1.50%), Flint (1.00%), Lansing (1.00%), Pontiac (1.00%). Calculate Michigan take-home pay
Missouri — Kansas City (1.00%), St. Louis (1.00%). Calculate Missouri take-home pay
New York — New York City (3.68%), Yonkers (0.74%). Calculate New York take-home pay
Ohio — Columbus (2.50%), Cleveland (2.50%), Cincinnati (1.80%), Toledo (2.25%), Dayton (2.50%), Akron (2.50%), Youngstown (2.50%), Canton (2.50%). Calculate Ohio take-home pay
Pennsylvania — Philadelphia (3.74%), Pittsburgh (3.00%), Scranton (3.40%), Reading (3.10%), Erie (1.65%), Bethlehem (1.00%), Harrisburg (2.00%), Allentown (1.85%). Calculate Pennsylvania take-home pay
Resident vs non-resident
The rule that catches people out is that these taxes often follow the workplace, not just the home address. Ohio and Pennsylvania cities commonly tax non-residents who work within city limits, usually at a reduced rate, and offer residents a partial credit for tax paid to another municipality. The practical effect is that commuting across a city line does not necessarily avoid the tax, and living in one taxing city while working in another can mean interacting with both.
Maryland takes a different approach: the local tax is a county-level piggyback on the state return, collected alongside state tax and set by the county of residence rather than of employment. New York City taxes residents only — commuters into Manhattan from New Jersey or Connecticut do not pay the city resident tax.
Why this matters more than the rate suggests
A 3.74% local rate sounds negligible next to a federal bracket of 22%. But local income tax is typically levied on gross wages with few or none of the deductions that reduce your federal and state bill — no large standard deduction, and often no reduction for 401(k) contributions. The rate is small; the base it applies to is not.
That also makes it one of the few taxes you can change purely by choosing an address. Federal brackets are fixed. State tax requires moving states. A municipal income tax can sometimes be avoided by moving a few miles, which is why it deserves a place in the calculation rather than a footnote.
Folding it into your numbers
Every salary page on this site includes a City / County Tax selector for states where it applies. The default figure excludes local tax, so if you live in one of the municipalities above, select it — the take-home figure, the budget breakdown, and the PDF export all update to reflect it.
If you are weighing two job offers in different cities within the same state, this is often the deciding line item, and it is the one most likely to be missing from whatever comparison your employer handed you.