(2023) (scheduled to phase out at end of 2026) and a Business Profits Tax of 8.5%. North Carolina – 4.99% (2022) Pennsylvania – 3.07% (many municipalities in Pennsylvania assess a tax on wages: most are 1%, but can be as high as 3.84% in Philadelphia. School districts may also impose an earned income tax up to Act 32 limits. ) Utah – 5.0% (2016) States with local income taxes in addition to state-level income tax The following states have local income taxes. These are generally imposed at a flat rate and tend to apply to a limited set of income items. Alabama: Some counties, including Macon County, and municipalities, including Birmingham (employees on payroll only) California: San Francisco (payroll only) Colorado: Some municipalities, including Denver and Aurora (flat-fee Occupational Privilege tax for privilege of working or conducting business; filed with municipality imposing fee) Delaware: Wilmington (earned, certain Schedule E income, as well as capital gains from sale of property used in business; income must be reported to the City of Wilmington if Wilmington tax is not withheld by employer.) Indiana (all local taxes reported on state income tax form): All counties Iowa (all local taxes reported on state income tax form): Many school districts and Appanoose County Kansas: Some counties and municipalities (interest and dividend income; reported on separate state form 200 filed with the county clerk) Kentucky: Most counties, including Kenton County, Kentucky, and municipalities, including Louisville and Lexington (earned income and certain rental income that qualifies as a business; reported as Occupational License fee/tax by employer or as Net Profits tax by business, filed with county or municipality imposing tax) Maryland (all local taxes reported on state income tax form): All counties, and the independent city of Baltimore Michigan: Many cities, including Detroit, Lansing, and Flint (most income above a certain annual threshold; reported on form issued by imposing city or on separate state form 5118/5119/5120 in the case of Detroit) Missouri (all other cities are prohibited from imposing local income tax): Kansas City (earned income; income must be reported to the Kansas City if Kansas City tax is not withheld by employer; residents must file the Earnings tax form to report wages on which Kansas City income tax is not withheld and the Business Earnings tax form to report self-employment income) St. Louis (earned income; income must be reported to the City of St. Louis if St.