Box 18 on a W-2 shows the portion of your wages that a city, county, or school district treats as taxable under its own local income tax. The number there is the starting point for figuring out what you owe (or are owed back) on a local return. If you don’t live or work somewhere with a local income tax, your employer leaves Box 18 blank, and you can move on.
What the Number Represents
Box 18 is the wage base a local taxing authority uses to compute your tax. It’s the local counterpart to Box 1 (federal taxable wages) and Box 16 (state taxable wages), scoped to a single jurisdiction. The IRS tells employers to use Boxes 15 through 20 for all state and local income tax information, and up to two localities can share one W-2. If your wages are taxable in more than two localities, the employer issues an additional W-2.1Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
If you only worked in a taxing jurisdiction for part of the year, Box 18 reflects wages from that period, not your full annual pay.
Why Box 18 Often Differs From Box 1
People often expect Box 18 to match Box 1. Sometimes it does. The numbers diverge when local rules treat certain deductions differently than federal law does, and retirement contributions and pre-tax benefits are the usual reasons.
Salary-reduction contributions to a Section 125 cafeteria plan aren’t federal wages for income tax purposes.2Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans Traditional 401(k) deferrals also reduce Box 1. A local jurisdiction can still count those amounts as taxable income, in which case Box 18 comes in higher than Box 1.
The reverse happens too. Some localities exempt 401(k) deferrals from their tax base, and Box 18 can match or fall below Box 1. The gap between the two boxes usually reflects a policy difference, not a payroll mistake. Look up your locality’s rules before assuming something is wrong.
How Boxes 19 and 20 Fit In
Boxes 19 and 20 complete the local tax picture. Box 19 shows the local income tax your employer actually withheld from your paychecks during the year. Box 20 names the specific taxing authority the money was sent to.1Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
On a local return, Box 18 is the taxable wage figure, Box 19 is credit for tax already paid, and Box 20 tells you which jurisdiction’s return to file. All three work together. If Box 18 has a value but Box 20 is blank, you won’t know where the tax belongs. Raise that with payroll before filing season gets busy.
Whether You Should See a Number There at All
Local income taxes exist in roughly a dozen states, and within those states they can reach millions of workers. Ohio and Pennsylvania are the heaviest, with hundreds of municipalities levying their own income taxes. Other states with some form of local income tax include Alabama, Colorado, Delaware, Indiana, Kentucky, Maryland, Michigan, Missouri, New York, Oregon, and West Virginia. Outside these states, Box 18 will almost certainly be blank, and you can ignore it.
Local rates are modest compared with federal rates, typically running from a fraction of a percent up to around 2–3%. They add up over a year of wages, and they often come with a separate return, which catches people off guard, especially after a move.
When Home and Work Are in Different Jurisdictions
Local taxes get complicated when your home and workplace sit in different taxing jurisdictions. Many localities tax nonresidents who work within their borders, and your home city may also tax you on all income regardless of where you earned it. Without some mechanism to prevent overlap, you’d pay two local taxes on the same wages.
Most jurisdictions solve this with a credit: your resident city reduces your tax bill by some or all of what you already paid to your work city. The credit doesn’t always cover the full amount. If your home city’s rate is higher, you still owe the difference. If the work city’s rate is higher, you usually get no refund of the excess from either side.
When a credit applies, you may see two sets of entries in Boxes 18 through 20, one for the work location and one for the residence. Some employers only withhold for the work location and leave you to settle up with your home city on your own return. Either way, track both jurisdictions so you file correctly with each.
Remote Work Wrinkles
Remote and hybrid work has muddied local rules. The traditional approach taxes wages based on where the employee physically performs the work, so days at a home office are sourced to the home jurisdiction rather than the employer’s office. A handful of states, including New York, Pennsylvania, and Delaware, apply a “convenience of the employer” test that can allocate all wages to the office location even when the employee works remotely. Some cities, including Philadelphia, follow a similar rule. If you split time between a home office and a workplace in different local tax jurisdictions, your W-2 entries may not reflect that split accurately, and you may need to adjust on the local return.
Using Box 18 to File a Local Return
Local income taxes usually require their own return, filed with the municipality or its designated tax collector rather than the IRS or your state agency. Tax software pulls Box 18 as the starting taxable income and applies Box 19 as tax already paid to figure out whether you owe more or get a refund.
Local filing deadlines generally track the federal April 15 date, but not always. Some jurisdictions set their own due dates, so check with the local tax authority rather than assuming the calendars match. Missing a local deadline can trigger penalties and interest even on small balances.
In Ohio and Pennsylvania, where hundreds of municipalities impose their own taxes, someone who moved mid-year or worked in more than one place may need to file returns with several jurisdictions. The W-2 will show separate entries in Boxes 18 through 20 for each locality, and each one corresponds to its own return.
If Box 18 Is Blank or Wrong
A blank Box 18 usually just means you aren’t subject to a local income tax, and there’s nothing to do. But if you know local tax was withheld, whether from an amount in Box 19 or from local deductions on your pay stubs, a blank or wrong Box 18 needs fixing before you file.
Start with your employer’s payroll department. Only the employer can issue a corrected W-2, known as Form W-2c.3Internal Revenue Service. About Form W-2 C, Corrected Wage and Tax Statements Don’t estimate or hand-adjust figures on your return. Filing numbers that don’t match what the employer reported to the IRS and the local tax authority invites compliance notices.
If payroll won’t correct the form, you can call the IRS at 800-829-1040 to open a formal W-2 complaint. The IRS will contact the employer and send you Form 4852, a substitute W-2 you can file with your best estimates from your final pay stub.4Internal Revenue Service. W-2 – Additional, Incorrect, Lost, Non-Receipt, Omitted
Wrong Locality in Box 20
A different problem shows up when the employer withheld the right amount but sent it to the wrong jurisdiction. This happens more than you’d expect with remote workers and employees who changed office locations mid-year. You typically need to file a refund request directly with the municipality that received the tax in error, then separately pay what you owe to the correct jurisdiction. The employer can fix withholding going forward, but recovering the misdirected payment usually falls to you.