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With over 7000 taxing authorities nationwide, tax setup can be one most difficult parts of onboarding. It is also one of the worst items to get wrong. We’ve created this guide to help you understand the proper setup for your employees and to help you answer tax questions your employees may have.
Local income taxes are generally paid by the employee but are withheld and deposited by the employer. Types of taxes for jurisdictions also vary and can range from:
- Flat tax rate: A single rate applies across all income levels, such as a 2% local tax on wages.
- Flat tax amount: A single amount not related to wages, such as $1.00 per week.
- Progressive tax rates, multiple tax rates which vary depending on the employee’s income level.
Employers also must pay local income taxes in some jurisdictions. For example, Denver Occupation Privilege Tax is $4.00 per month for all employees employed during the period. Additionally, local jurisdictions may hold the employer liable for any taxes that are not withheld from the employee.
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Alabama: EE & ER, flat tax rate, resident and nonresident
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Colorado: EE & ER Flat tax amount, resident and nonresident
- Aurora, Denver, Glendale, Greenwood Village, Sheridan
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Delaware: EE Only, flat tax rate, resident and nonresident
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Indiana: EE Only, flat tax rate, resident and nonresident
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Iowa: EE Only, flat tax rate
- School Districts – resident only
- Appanoose County – resident and nonresident
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Kentucky: EE Only, flat tax rate, resident and nonresident
- Over 200 taxing jurisdictions
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Maryland: EE Only, flat tax rate, resident and nonresident
- All counties (all local taxes included in state tax amount and reported to state comptroller)
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Michigan: EE only, flat tax rate, resident and nonresident
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Missouri: EE Only, flat tax rate, resident and nonresident
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New Jersey: EE only, flat tax rate, resident and nonresident
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New York: EE only, flat tax rate
- New York City – resident only
- Yonkers – resident and nonresident
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Ohio: EE & ER, flat tax rate
- Over 800 taxing jurisdictions
- Special considerations for OH Locals include JED, and credits for taxes paid to other jurisdictions
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Oregon: EE only, flat tax rate, resident and nonresident
- Tri-Met District
- Lane County Transit District
- Multnomah County Preschool for All
- Portland Metro Supportive Housing Services
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Pennsylvania: EE Only, resident and nonresident
- Almost 3,000 taxing jurisdictions
- EIT – flat tax rate
- LST – flat tax amount
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West Virginia: EE Only, flat tax amount, resident and nonresident
- Charleston, Huntington, Parkersburg, Weirton
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