If you live in one city and work in another, the question of whether you file city taxes where you live or where you work usually has the same answer: potentially both. Resident cities tax the people who live there on all earned income. Work cities tax the people who earn wages inside their limits. When both apply, your home city generally gives you a credit for what you paid the work city, so you are not fully taxed twice on the same paycheck.
That is the short version. The longer version depends on whether either city taxes income at all, what the rates are, and how your home city’s credit rules are written.
First, Check Whether Either City Taxes Income
Most people in the United States owe no city income tax, because most states do not authorize one. Local income taxes are concentrated in Indiana, Kentucky, Maryland, Michigan, Ohio, and Pennsylvania, where hundreds or thousands of municipalities impose them. A smaller set of cities in other states also tax income or wages, including Birmingham, Denver, Wilmington, Kansas City, St. Louis, Newark, New York City, and Portland.
If neither your home city nor your work city appears in that landscape, you can stop here. The quickest check is your pay stub: look for a local tax withholding line. You can also search your city’s government site for an income tax or earnings tax page. No page usually means no tax.
If You Live in a Taxing City
Living inside a city that taxes income means you owe tax on all of your earned income, regardless of where you perform the work. A resident who commutes to a job in the suburbs still owes the home city’s resident rate on those wages. Residency, for these purposes, generally means maintaining a home in the city for a substantial part of the year.
This is why “where I work” is not the whole question. If your home city taxes residents, it taxes your paycheck no matter whose city limits you drove into that morning.
If You Work in a Taxing City but Live Elsewhere
Many cities also tax non-residents who work within their limits, usually at a lower rate than residents pay. Philadelphia charges residents 3.74% and non-residents 3.43% as of mid-2025. Detroit charges residents 2.4% and non-residents 1.2%. A few cities, including New York City, tax only residents and leave commuters alone.
When your work city imposes a non-resident wage tax, your employer will typically withhold it from your paycheck automatically. You may still need to file a non-resident return to settle up at year end, but the money is already going to the right place during the year.
If Both Cities Tax Income
Living in one taxing city and working in another is where things get complicated. Without a relief mechanism, you could owe the full rate to both. Most cities handle this through a credit: your home city gives you a credit for the tax you already paid to the city where you work, so the same wages are not taxed in full twice.
The credit is not always a wash. If your home city’s rate is 2.5% and you paid 1.5% to your work city, you still owe the 1.0% difference to your home city. If the work city’s rate is higher than your home city’s, you generally do not get a refund for the excess. Some cities cap the credit or restrict it in other ways, so your home city’s specific credit rules are the ones that control how much you ultimately owe.
State-level reciprocity agreements between neighboring states can eliminate filing in the work state entirely, but at the municipal level those arrangements are less common. For city tax, assume you are dealing with a credit, not a reciprocity waiver.
If You Work Remotely
Remote work has muddled the usual rules. The traditional framework assumed you physically traveled to an office, which made the work-city question easy to answer. When you work from home in a different city or state from your employer, it is no longer obvious which jurisdiction gets to tax the income.
Some jurisdictions apply a “convenience of the employer” rule. Under that approach, if you work remotely for your own convenience rather than because your employer requires it, the income is still treated as earned at the employer’s office location. Philadelphia applies a version of this locally. During the COVID-19 pandemic, Ohio passed emergency legislation deeming all remote work days as days worked at the employee’s principal office location, which drew legal challenges from out-of-state workers who never set foot in Ohio during the period.
If you work remotely, check the rules in both your home city and the city where your employer is based. You may owe tax in one, both, or neither depending on how each sources income from remote workers.
Common Scenarios at a Glance
- Live and work in the same taxing city: file one city return and pay the resident rate.
- Live in a taxing city, work in the suburbs: owe your home city’s resident tax on all income, even though you earn it elsewhere.
- Live in the suburbs, work in a taxing city: owe the work city’s non-resident rate on wages earned there, usually withheld by your employer.
- Live in one taxing city, work in another: may owe both, but your home city typically credits what you paid the work city.
- Live and work in a state with no local income taxes: no city tax applies, which covers most of the country.
- Work remotely for an employer in a taxing city: check both cities, since convenience-of-the-employer rules could create liability in the employer’s city even if you never physically work there.
What You Actually File
City tax returns are separate from your federal and state returns and use their own forms. You get them from your city’s tax department website or, in states like Ohio where a regional agency handles collections for hundreds of municipalities, through that agency’s portal. Many cities now offer electronic filing.
Deadlines generally fall on April 15, matching the federal date, but verify with your city. A federal extension automatically extends the local deadline in some cities and not in others.
In states that authorize local income taxes, employers are generally required to withhold them, much like federal and state withholding. Your employer sets the withholding based on where you live and where you work, which can mean withholding for two different cities. The system breaks down with out-of-state employers or small employers unfamiliar with local obligations. If your employer does not withhold, you are responsible for making estimated payments yourself, usually quarterly. Self-employed workers are in the same position. Skipping estimated payments can trigger underpayment penalties even if you pay in full at filing time.
If You Skip It
Cities take unpaid local taxes seriously. Late-filing penalties are commonly 5% of the tax owed per month of delay, capped around 25%, with late-payment penalties and interest running on top. A small bill can grow substantially in a year or two.
Enforcement can escalate to liens against your property, which block a sale or refinance until you clear the debt, and to wage garnishment. In some jurisdictions, willful failure to file or deliberate evasion is a criminal offense carrying fines and potential jail time.
If you get a notice you believe is wrong, most cities offer an administrative appeal. Start by contacting the city’s tax office for an informal review, and request a formal hearing if that does not resolve it. Keep your return, proof of payment, and all correspondence. The notice itself should explain your options and the deadline to respond.