Cities and Local Governments That Tax Freelancers (2026)

New York, Maryland, Ohio and Pennsylvania account for most local income tax in the country. If you live in one of them, assume a local return is part of your year until you confirm otherwise.

New York City collects more than the next several governments combined. Maryland counties fill much of the list because every county levies the tax, not just big cities.

Philadelphia has trimmed its resident rate slowly, from 3.9102% in 2015 to 3.74% in 2025, with 3.735% scheduled for 2026. The cuts are real but small, so budget for roughly the same bite each year.

The brackets climb fast. A single filer hits the top 3.876% rate once NYC taxable income goes over $50,000. Joint filers get there above $90,000.

Most Maryland counties sit at or near 3.2%. For 2026, the gap between Worcester at 2.25% and Dorchester or Kent at 3.3% is just over a full percentage point of your taxable income.

Selected city and local taxes that reach freelancers and the self-employed

Source: New York State Department of Taxation and Finance, Instructions for Form IT-201, Full-Year Resident Income Tax Return (2025), New York City tax rate schedule and Yonkers worksheet; NYC Department of Finance, Unincorporated Business Tax (UBT); City of Philadelphia, Department of Revenue, Net Profits Tax; City of Philadelphia, Department of Revenue, Tax Rate History; City of Kansas City, Missouri, Finance Department, Have You Paid Your KCMO Earnings Tax (E-Tax)?; Comptroller of Maryland, Maryland Income Tax Rates and Brackets (KB0010014); Michigan Department of Treasury, Which cities impose an income tax?. Download as image

Michigan cities that levy income-related taxes

Source: Michigan Department of Treasury, Which cities impose an income tax?. Download as image

Local individual income tax revenue, FY2024 (Census) by state

• 7Over $1 billion
• 5$100 million to $1 billion
• 11Under $100 million reported
• 28None reported

Which cities have an income tax that hits freelancers?

Fewer than you might fear, but the ones that do are big. New York City, Philadelphia, Kansas City, Missouri, Detroit and the rest of Michigan's 24 taxing cities, Yonkers, and every county in Maryland all reach self-employment income in some form. Ohio, Pennsylvania, Kentucky and Indiana also have widespread local taxes run by cities, counties or school districts.

The key detail for you is that many of these taxes apply to net profit, not just wages. Kansas City says its 1% earnings tax also applies to business net profits. Philadelphia's Net Profits Tax is aimed at sole proprietors, partnerships, LLCs and other unincorporated businesses. New York City layers a business tax on top of its personal income tax.

Most of the country has nothing like this. California, Texas, Florida and many other states show no local income tax at all in the Census data, so if you live there, your local exposure is more likely to come through sales or property taxes.

A quick rule of thumb: if you have ever received a W-2 with a city or school district line filled in, your area probably taxes income. When you switch to freelancing, nobody withholds that tax for you anymore. You owe it directly.

Do freelancers in New York City pay two city taxes?

Often, yes. As an NYC resident you pay the city's personal income tax, which ran from 3.078% to 3.876% for tax year 2025, filed on your New York State return. Separately, the Unincorporated Business Tax charges 4% on self-employment income allocated to the city.

There is relief for smaller operators. If your UBT liability is $3,400 or less, a full credit wipes it out. Between $3,401 and $5,400 you get a partial credit. Residents who pay UBT as sole proprietors can also credit part of it against their city personal income tax, so the two do not stack in full.

Live in Yonkers instead? You owe a resident surcharge of 16.75% of your net New York State tax. It is easy to miss because it is figured as a percentage of another tax rather than of your income.

Put together, a full-time freelancer living in the city can face state tax, city personal income tax and UBT on the same profit. That is why NYC rates often look high to people who move there from places with no local tax at all.

How does Philadelphia tax self-employed people?

Philadelphia's Net Profits Tax was 3.74% for residents and 3.43% for non-residents in tax year 2025. Residents owe it even when the business operates outside the city. Non-residents owe it on business they do in Philadelphia. Corporations are exempt from it.

There is also the Business Income and Receipts Tax, at 1.410 mills on gross receipts and 5.71% on taxable net income for 2025. The city collected $2,406.4 million in income tax in FY2024, third among all local governments in the country, behind only New York City and the District of Columbia.

The rate history matters if you are planning ahead. Resident rates have fallen in most years since 2015 and are scheduled to keep sliding, to 3.735% in 2026, but slowly. Treat the cut as a small bonus rather than something to plan your pricing around.

Where you live versus where your client is

Residence is usually what triggers the tax. Maryland bases its local tax on where you live, not where you work, with county rates from 2.25% to 3.30% for tax year 2025. Kansas City taxes residents on everything they earn and non-residents only on income earned inside the city.

For a remote freelancer, this means a client in Manhattan does not, by itself, put you on the hook for NYC resident tax. But doing physical work inside a taxing city can. A designer living in New Jersey who spends weeks on site in Philadelphia may owe the non-resident rate on that slice of profit.

When in doubt, keep a short log: dates, city, client and what you did there. It takes a minute a week and saves hours if a city ever asks how you split your income.

Why Ohio, Pennsylvania and Kentucky catch so many freelancers off guard

In New York and Philadelphia the tax is well known. In Ohio, Pennsylvania and Kentucky it is spread across hundreds of cities, townships and school districts, which makes it much easier to miss.

Ohio is the clearest case. Columbus alone brought in $1,136.3 million in income tax in FY2024, and Cleveland $535.1 million. Both rank among the largest local income tax collectors in the country. In Ohio the city return is not an afterthought. It is a main event.

Pennsylvania works the same way outside Philadelphia. Pittsburgh's school district and the city each collect their own tax. In Kentucky, the biggest local collectors are Louisville Metro, Lexington-Fayette and the Jefferson County school district. Indiana counties, Iowa school districts and Oregon's Metro and Multnomah County add their own versions.

The practical problem is that each one may have its own form, its own deadline and its own idea of what counts as net profit. If you just moved to one of these states, ask a local preparer which collector handles your address before your first estimated payment is due.

What should a freelancer do about local taxes?

• Look up your exact address, not just your city name. Taxing districts in Ohio, Pennsylvania and Michigan often follow municipal or school district lines.
• Add the local rate to your estimated tax set-aside. Many cities expect quarterly or periodic payments from the self-employed, the same as the state.
• Price it in. If you pay 4% UBT or a 3.74% net profits tax, your rate needs to cover it. A quote that works in a no-tax city can leave you short in Philadelphia.
• Track on-site days in other cities. They support where your income was earned if a non-resident tax question comes up.
• Check before you move. A move across a county or city line can change your local bill, sometimes by a full percentage point or more.
• Keep invoices and contracts organized by client location. Allocation rules, like NYC's for UBT, rely on records of where the work happened.

Sources and method

Every number on this page comes from the sources below, each opened and read on or before October 18, 2026. A second, independent review checked every figure against its source and corrected anything that did not match. 51 of 51 state entries were confirmed; any that could not be are marked "Not yet confirmed" and left out of every count and chart.

1. U.S. Census Bureau, 2024 Annual Survey of State and Local Government Finances, Individual Unit Files (24statetypepu.txt, 2024FinEstDAT, Fin_PID_2024) and Technical Documentation (2024 survey; files posted August 4, 2026)
2. New York State Department of Taxation and Finance, Instructions for Form IT-201, Full-Year Resident Income Tax Return (2025), New York City tax rate schedule and Yonkers worksheet (2025 tax year edition)
3. NYC Department of Finance, Unincorporated Business Tax (UBT) (Accessed October 2026 (2025 forms listed))
4. City of Philadelphia, Department of Revenue, Net Profits Tax (Tax Year 2025 rates, accessed October 2026)
5. City of Philadelphia, Department of Revenue, Tax Rate History (Revised June 11, 2026)
6. City of Kansas City, Missouri, Finance Department, Have You Paid Your KCMO Earnings Tax (E-Tax)? (Accessed October 2026)
7. Comptroller of Maryland, Maryland Income Tax Rates and Brackets (KB0010014) (2025 and 2026 tax years, accessed October 2026)
8. Michigan Department of Treasury, Which cities impose an income tax? (Accessed October 2026)