Whether you file city taxes where you live, where you work, or both depends on the rules of each city involved. If your home city taxes residents, you generally owe tax on all your earned income no matter where you earn it. If the city where you work taxes non-residents, you owe that city too. When both apply, most home cities give a credit for what you paid the work city, so you are usually not taxed twice on the same dollar.
Does Your City Even Tax Income
Most Americans never file a local income tax return because their state does not authorize one. Local income taxes are concentrated in about 16 states, with the heaviest use in Indiana, Kentucky, Maryland, Michigan, Ohio, and Pennsylvania. A smaller group of individual cities in other states levy them too, including Birmingham, Denver, Wilmington, Kansas City, St. Louis, Newark, New York City, and Portland.
If you live and work outside those areas, you almost certainly have no city income tax obligation. The fastest check is your pay stub: look for a local, city, or municipal withholding line. You can also search your city’s website for an income tax or earnings tax page. No page usually means no tax.
Resident Rules vs. Commuter Rules
Cities that tax income draw a sharp line between people who live there and people who only work there.
If You Live in the Taxing City
Residents typically owe tax on all earned income regardless of where the work is performed. A resident who commutes to a suburban job still owes the home city’s tax on those wages. Residency for this purpose usually means keeping a home in the city for a substantial part of the year.
If You Only Work in the Taxing City
Many cities also tax non-residents on wages earned inside city limits, often at a lower rate than the resident rate. Philadelphia charges residents 3.74% and non-residents 3.43% as of mid-2025. Detroit charges residents 2.4% and non-residents 1.2%. A few cities go the other way: New York City taxes only its residents and imposes no income tax on commuters.
In practice, if you commute into a city with a non-resident wage tax, your employer will usually withhold it automatically. If you live in the taxing city and commute out, your home city’s resident tax still applies to those outside wages.
When You Live in One Taxing City and Work in Another
This is where double taxation becomes a real risk, and where the credit system does most of the work. Most home cities allow a credit for tax you already paid to the city where you work, so the same income is not fully taxed twice.
The credit is not always dollar-for-dollar. If your home city’s rate is 2.5% and the work city took 1.5%, you still owe the 1.0% difference at home. If the work city’s rate is higher than your home city’s, you generally do not get a refund for the excess. Some cities cap the credit or attach conditions to it, so the specific rule in your home city determines what you actually end up paying.
State-level reciprocity agreements can eliminate the need to file in a neighboring state, but those arrangements are less common at the municipal level. For city taxes, expect to rely on the credit approach rather than reciprocity.
Remote Work Complicates the Question
The old framework assumed you physically traveled to an office, which made it easy to say which city could tax the paycheck. Remote work broke that assumption.
Some jurisdictions apply a “convenience of the employer” rule. If you work from home for your own convenience rather than because your employer requires it, the income can still be treated as earned at the employer’s office location. Philadelphia applies a version of this rule locally.
If you work remotely, check the rules in both your home city and your employer’s city. You could owe tax in one, both, or neither, depending on how each jurisdiction sources income from remote workers.
Withholding and Estimated Payments
In states that authorize local income taxes, employers are generally required to withhold them from paychecks the same way they withhold federal and state tax. Your employer sets withholding based on where you work and where you live, which can mean withholding for two different cities at once.
The system breaks down when an out-of-state employer or a small employer is not set up to handle local taxes. If nothing is being withheld, you are responsible for making estimated payments during the year. Self-employed people are in the same position. Most taxing cities expect quarterly estimated payments once your annual liability crosses a fairly low threshold, and skipping them can trigger underpayment penalties even if you pay the full bill at filing time.
How to File
City returns are separate from your federal and state returns and use their own forms. You can find them on your city’s tax department website, or in states like Ohio, through the regional agency that collects for many municipalities. Electronic filing is widely available and generally faster and less error-prone than paper.
Filing deadlines usually track April 15, but confirm with your city because adjustments happen. A federal extension automatically extends the local deadline in some cities and requires a separate request in others.
Payment is typically by electronic bank transfer, credit or debit card (often with a processing fee), or mailed check. If you mail a check, put your account number and the tax year on it and use a mailing method that gives you proof of delivery.
Penalties for Not Filing
Cities enforce local taxes seriously, and the penalties compound. Late-filing penalties are commonly a percentage of the tax owed per month, often around 5% monthly up to a cap near 25%. Late-payment penalties and interest run on top of that. A modest bill can grow substantially over a year or two of neglect.
Beyond penalties and interest, cities can file liens against your property, which block sales and refinances until you resolve the debt, and they can garnish wages. In some jurisdictions, willful failure to file or deliberate evasion is a criminal offense with possible fines and jail time.
If you get a notice you believe is wrong, most cities offer an administrative appeal. Contact the tax office first for an informal review; if that does not resolve it, you can request a formal hearing. Keep your return, proof of payment, and all correspondence. The notice itself will spell out your deadlines and options.
Common Scenarios at a Glance
- Live and work in the same taxing city: one city return, resident rate on your income.
- Live in a taxing city, work in the suburbs: you owe the home city’s resident tax on all income, even wages earned elsewhere.
- Live in the suburbs, work in a taxing city: you owe the work city’s non-resident rate on those wages, usually withheld by your employer.
- Live in one taxing city, work in another: you may owe both, but your home city typically credits what you paid the work city.
- Live and work in a state with no local income taxes: no city tax applies, which covers most of the country.
- Work remotely for an employer in a taxing city: check both cities’ rules; convenience-of-the-employer rules can create liability in the employer’s city even if you never physically work there.