How to Calculate Local Taxes

Whether you are self-employed or work for someone else, filing taxes is an inescapable part of life. To make things even more complicated, workers will need to file taxes on the federal, state and even local levels. To avoid underpayment penalties and other ramifications, it is important to determine how much you will owe in local taxes and set that money aside so that it will be there when you need to pay those taxes.

Check with your employer to find out what percentage is being withheld for local taxes. You can also check your pay stub and calculate the percentage based on your gross income. If you are self-employed, you will need to find out the percentage you owe by contacting your municipality directly.

Contact the municipality where you live and ask about the local tax rate. Local taxes are generally computed based on a percentage of earned and unearned income, but the percentage will vary by location.

Multiply the tax rate by your annual income. For example, if you earn $40,000 a year and your local tax rate is 1%, your local taxes would be $400 per year.

Make sure that enough local taxes are being taken out of your check. If you are self-employed, be sure to set aside enough money to cover the local taxes you will owe. If your local municipality requires local tax payments on self-employment income, you can calculate the amount due by multiplying the amount you expect to earn for the year by the percentage of the local tax.

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About the Author

Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.