Local income tax defention

Local governments in several states impose a local income tax. Local taxes are in addition to federal and state income taxes. Local income taxes generally apply to people who live or work in the locality. As an employer, you need to pay attention to local taxes where your employees work.

If the local income tax is a withholding tax, then you are required to withhold it from employee wages. Or if the local income tax is an employer tax, you must pay it.

Local income taxes are typically used to fund local programs, such as education, parks, and community improvement.

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