Residents of some states face high local tax rates in addition to any federal and state taxes they might pay.
About one-third of states let municipalities, counties, and other bodies — such as school districts — impose extra income taxes.
If you're concerned that paying extra taxes will hamper your efforts to get ahead financially , you might want to avoid living in the following states, where local taxes can take a bigger bite out of your paycheck.
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1. Maryland
Local taxes are difficult to avoid in Maryland. All 23 counties in the state have an income tax, with rates ranging from 2.25% to 3.2%. Baltimore also has its own 3.2% tax.
Maryland also imposes a 6% sales tax on all purchased goods and services.
Own a car? Here's 7 warning signs you're paying too much for car insurance. 2. Kentucky
Most counties in Kentucky impose income taxes. Rates range from a tiny 0.01% to a more robust 2.5%.
Fortunately, state income taxes in Kentucky are relatively low. The state imposes a 4.5% flat tax on income.
3. Ohio
Of the more than 400 municipalities in Ohio, the vast majority have income taxes that range between 0.5% and 3%. A handful do not levy income taxes.
Ohio’s state income tax is graduated based on income and ranges from 2.75% to 3.5%.
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4. New York
New York is notorious for its high state income tax rates, which range from 4% to 10.9%. Both New York City and Yonkers also charge income taxes.
New York City’s local income tax is income-dependent and ranges from 3.078% to 3.876%. Yonkers has a personal income tax surcharge of 16.75%.
5. Pennsylvania
Many municipalities in Pennsylvania charge an earned income tax on wages that ranges from 1% to 3.6% for the state's residents.
However, Pennsylvania also has a low flat-tax rate of 3.07% on income. And retirees catch a bit of a break if they live in the Keystone State: Pennsylvania is among the many states that don't impose taxes on Social Security.
6. Michigan
Many cities in Michigan charge an income tax on incomes, usually at a rate of 1%.
However, rates are higher in other cities. For example, in Detroit, the tax is 2.4% for residents and 1.2% for nonresidents.
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7. Indiana
All 92 counties in Indiana charge a tax on income, with rates ranging from 1% to 2.864%.
Out of all of the states in America, Indiana is one of two that has local income taxes in every county. The other state is Maryland.
8. Colorado
In Colorado, five cities impose a flat tax on income in which residents pay a specific dollar amount from each paycheck.
These cities are Aurora, Denver, Glendale, Greenwood Village, and Sheridan. The taxes are relatively modest, ranging from $2 a month in Aurora to $5.75 a month in Denver.
9. West Virginia
West Virginia is another state that imposes a flat income tax on residents of larger cities. It differs from Colorado in that West Virginians are charged per paycheck rather than per month.
West Virginia has four cities that charge this type of tax: Charleston, Huntington, Parkersburg, and Weirton.
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Bottom line
Before you move, do your research on taxes. Local taxes can take an extra bite out of your earnings, making it tougher to keep more money in your pocket .
You may find yourself grateful that you took the time to understand where local taxes are high so you can avoid excessive taxation.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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