What are Local Withholding Taxes?

Local withholding taxes are taxes that are withheld from an employee’s paycheck by their employer and are paid to local government entities. These taxes are in addition to federal and state withholding taxes.

Local withholding taxes can include taxes for city, county, and school district purposes. These taxes are typically used to fund local government services, such as schools, roads, and infrastructure.

The amount of local withholding tax that an employee has to pay depends on the employee’s location and the local tax rate. Employers are responsible for calculating and withholding the correct amount of local tax from their employees’ paychecks and remitting it to the appropriate government agency.

It is important for employers to stay up-to-date on local tax laws and regulations to ensure compliance with local tax requirements. Failure to comply with local tax laws can result in penalties and fines for both the employer and the employee.

Refer to our Resources Page for helpful Local Withholding Tax links.