6. Identify local income tax deductions

Cities and towns, like other levels of government, need money to provide services to residents. For this reason, many of them charge an income tax, sometimes known as a wage tax.

Typically the wage tax is a flat rate, the same percentage for everyone. In a few areas, the local wage tax is higher than the state income tax. If you live in a locality that collects a wage tax, the deduction will show up on your paycheck stub.

Calculating wage tax:

• If your weekly gross pay is $615.38 and the township where you live charges a flat 1.5% local income tax. How much will your employer deduct from each of your paychecks?
• For the answer, multiply $615.38 by 1.5%, or .015:
  $615.38 × .015 = $9.23