What Is a Local Tax?

A local tax is any tax levied by a local subnational governmental entity such as a city, town, county, school district, or special district, and not by the federal government or the state. Local taxes help finance locally provided public services such as law enforcement, schools, road maintenance, parks, and sanitation.

What are the Various Forms of Local Taxes?

There are a number of types of taxes that may be collected by a local government. Examples of these include:

• Local sales tax: Additional tax levied on taxable purchases made in specific cities or counties.
• Local income tax: Tax that is levied on individual or corporate income by some cities or municipalities.
• Property tax: Usually a tax levied on real estate as well as personal property in some areas.
• Local wage tax: A tax that may be levied based on employee wages or payroll in specific cities or municipalities.
• Business tax or gross receipts tax: A tax which is levied on the gross receipts of a business or its revenue, as per local guidelines.
• Occupation tax: A tax that is levied on hotel stays and other forms of lodging.

These taxes may not be collected by all localities and may vary considerably from one area to another.

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