Local business taxes on self-employment income in 2026

Local taxes on business income are easy to miss because neither the IRS nor most state calculators show them. They are set by a city, a county, a school district or a transit district, collected by that body or by the state on its behalf, and filed on a separate return or a separate line. Maryland is the clearest example of the stacking: the county income tax is computed on the same taxable income as the state tax and paid with the state return, so a freelancer there carries two percentages on one profit.

Taxes on net profit: the city takes a share of Schedule C

The largest group taxes the net profit of a business, the same figure that goes on Schedule C, at a flat rate with no brackets. Ohio cities are the densest network: Columbus taxes residents at 2.5% on all income and gives them credit for tax paid to the city where they work, up to that rate (Columbus Income Tax Division). Michigan cities levy a similar tax, with Detroit at 2.4% for residents and a lower rate for nonresidents, after a $600 exemption per person (Michigan Treasury, Detroit withholding). Kansas City's earnings tax of 1% reaches residents' net profits wherever the business is carried on, and sole proprietors file it on Form RD-108 (Kansas City Finance).

Pennsylvania builds the tax into its whole map. Outside Philadelphia, municipalities and school districts share a local earned income tax that is usually capped at a combined 1% and applies to a sole proprietor's net profits; home rule cities such as Pittsburgh go above it. Philadelphia runs its own system, with the Net Profits Tax at 3.735% for residents in tax year 2026 and a return required even at a loss (City of Philadelphia). Kentucky cities and counties call theirs an occupational license tax: Lexington-Fayette charges 2.25% on compensation and business net profits earned in the county (Lexington Division of Revenue).

Taxes on unincorporated business

New York City and Portland tax business income through a separate business tax rather than an income tax. The NYC Unincorporated Business Tax is 4% of business income allocated to the city, with a filing threshold and a credit that removes the tax for small earners (NYC Department of Finance). Portland's Business License Tax and Multnomah County's Business Income Tax both apply to net business income, each with a gross receipts exemption and a deduction for the owner's own work.

Taxes on gross receipts: charged before expenses

A gross receipts tax is figured on sales, not profit, so a low-margin business pays it even in a year with no profit. Seattle's business license tax works that way, though from 2026 no tax is due under $2 million of Seattle taxable revenue; a return is still required (Seattle Finance). Virginia localities levy a BPOL license tax on gross receipts, with no tax below $100,000 of receipts in localities of more than 50,000 people (Code of Virginia 58.1-3706). Philadelphia's Business Income and Receipts Tax combines both bases, 5.65% of taxable net income plus a mills charge on gross receipts, and since tax year 2025 the former $100,000 receipts exemption no longer applies (Philadelphia tax rate history). West Virginia municipalities and San Francisco have their own versions; Hawaii's four counties add a surcharge to the state general excise tax.

County taxes that ride on the state return

In three states the local layer is calculated from the state return rather than from the business. Maryland's counties and Baltimore City set a percentage of Maryland taxable income, from 2.25% to 3.3% at a single rate, with Anne Arundel and Frederick using brackets (Comptroller of Maryland instructions). All 92 Indiana counties levy a local income tax at their own rate, listed in the Department of Revenue's county rate table (Indiana DOR). Most Iowa school districts add a surtax expressed as a percentage of the state tax, not of income (Iowa Department of Revenue).

Flat amounts per person

A few places charge a fixed sum instead of a rate. Pennsylvania's Local Services Tax is limited to $52 per person per year, with an exemption below $12,000 of earnings where the tax exceeds $10 (Pennsylvania DCED). Under Denver's Occupational Privilege Tax, every business with activity in the city owes at least $4 a month, and the $500 earnings test that spares low-paid employees does not apply to owners or partners (Denver tax guide).

Every local tax read so far

Rates as published by the city, county or state that administers each tax. Where the fact sheet flags a rate that was not re-read for 2026, the cell sends you to the source instead. 12 of these taxes apply a known rate to self-employment profit and can be selected in the calculator above.

Residence, workplace and entity type

Most city income taxes follow two rules at once: residents pay on all their income, and nonresidents pay on what they earn inside the city, often at a lower rate. A freelancer who lives in one taxing city and works in another usually gets a credit at home for the tax paid at work, up to the home rate. The legal form of the business also changes the bill. An LLC taxed as an S corporation avoids the NYC Unincorporated Business Tax but pays the city's General Corporation Tax (NYC Finance, GCT); in Ohio, most cities tax the net profit of an S corporation or LLC at the entity level (Central Collection Agency, Cleveland); and the salary an S corporation pays its owner falls under wage taxes such as Philadelphia's. The city pages, starting with New York City and Philadelphia, give the detail, and the state income tax comparison covers the layer underneath.