Local Income Tax Definition

Term Definition
Local income tax can be imposed by cities, counties, local governments and school districts. This tax is often used to fund local operations and community programs.

Extended Definition
Local income tax rates vary by location. Some taxes are a flat rate, some change with an employee’s income level, and some are levied from state income tax. School districts in Ohio and Pennsylvania can also impose a type of local income tax to help fund their operations. If an employer has a business within a location that imposes a local tax, they most likely will have to withhold the tax from their employees’ wages. Employers should check with their local taxing agency for more information.

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