Multiplier Logo
Loading Animation Image

Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

Search Icon
# A B C D E F G H I J L M N O P R S T U V W X Y Z

Local Income Tax

What is Local Income Tax?

Local income tax refers to a tax levied on the income of individuals, businesses, or entities by local government authorities, such as cities, counties, or other localities. This tax is in addition to federal and state income taxes that may already apply to the income of taxpayers within these jurisdictions.

Function and Rationale

The primary function of local income tax is to generate revenue to fund local services and infrastructure, such as public education, transportation, law enforcement, and other community services. Local governments may choose to impose this tax to meet specific financial needs without relying solely on state or federal funding. This autonomy allows localities to address community-specific needs and priorities directly.

Benefits and Challenges

For residents, the benefits of local income taxes may include better-funded local services and potentially lower property taxes. However, these taxes can also add complexity to the tax filing process and increase the overall tax burden. Businesses might face similar pros and cons, benefiting from improved local infrastructure while managing higher operational costs due to increased taxation.

Local income tax plays a significant role in shaping the fiscal health and quality of life in many communities. By directly funding essential local services, these taxes help maintain and improve the infrastructure and services upon which residents and businesses rely. However, the impact of local income taxes can vary widely depending on the rates set by local authorities and the specific uses to which these funds are put.

Ready to take the leap? Choose Multiplier as your EOR partner

Gain fresh perspectives

Take a look at our new blogs and e-books

Security by Design

Security by design: Multiplier is SOC 2 Type 2 compliant and ISO 27001:2022 certified

Read more

Mp More Link Arrow Right
multiplier-named-leader-in-the-iec-group-global-eor-study-2024

Multiplier named Industry Leader and IEC Star in the 2024 IEC Global EOR Study

Read more

Mp More Link Arrow Right
Lions of Teranga: How to Hire the Best Talent from Senegal

Lions of Teranga: How to Hire the Best Talent from Senegal

Read more

Mp More Link Arrow Right
Footer 24x5 New Img2x

An all-in-one international employment platform