State and Local Tax Beyond the State: Unique Municipal and Local Tax Regimes

This webinar will examine the complex and often inconsistent landscape of state and local taxation, focusing on unique local tax regimes that operate outside — and often alongside — state systems, including New York City, San Francisco, Los Angeles, Virginia's BPOL tax, Philadelphia's BIRT, and the local occupational and net profits taxes imposed across Kentucky and Ohio. Our panel of notable local tax specialists will analyze how cities and localities impose taxes that differ significantly from state systems, many measured on gross receipts rather than net income, creating compliance challenges and planning opportunities for practitioners advising multistate businesses and individuals.

New York City provides a leading example of local tax complexity, including the Commercial Rent Tax (CRT), which applies to certain tenants leasing commercial property in Manhattan with annual rents exceeding $250,000 at an effective rate of approximately 3.9%. The city also imposes the Unincorporated Business Tax (UBT), a 4% tax on income allocated to NYC from partnerships, LLCs, and sole proprietors.

On the West Coast, cities such as San Francisco and Los Angeles highlight how local tax structures diverge not only from state law but also from each other. San Francisco has recently implemented updated sourcing and apportionment rules under Proposition M, shifting to a more market based framework where receipts are sourced based on where the benefit of services is received. At the same time, Los Angeles administers a gross receipts-based business tax that varies by business classification and activity, requiring taxpayers to determine liability based on specific categories (e.g., professions, retail, wholesale).

Gross receipts-based local taxation persists on the East Coast as well, even in states with income-based systems. Virginia localities impose the Business, Professional and Occupational License (BPOL) tax on gross receipts, with rates that vary by business classification — commonly $0.05 to $0.58 per $100 of receipts — and rate schedules set independently by each city and county. Philadelphia's Business Income & Receipts Tax (BIRT) combines a gross receipts component ($1.40 per $1,000 of receipts) with a net income component (5.71% for tax year 2025), and the city recently eliminated its $100,000 small-business exclusion as part of a multiyear rate-reduction plan, significantly expanding the number of businesses subject to tax.

Local taxation also reaches deep into the Midwest and border states. Kentucky authorizes cities and counties to impose occupational license taxes on payroll, net profits, or gross receipts, with rates commonly ranging from 0.5% to 2.5% and combined city-county rates reaching 2.2% in Louisville and 2.25% in Lexington — a patchwork of nearly 90 counties and hundreds of cities with independent filing obligations. Ohio presents similar complexity, with several hundred municipalities imposing net profits and payroll-based income taxes, most administered through third-party agencies such as the Regional Income Tax Agency (RITA) or the Central Collection Agency (CCA) rather than the municipalities themselves, each applying its own apportionment and sourcing rules — though businesses may elect centralized filing through the Ohio Department of Taxation for the net profits portion.

These regimes operate alongside other local taxes, creating overlapping compliance considerations across every stage of a business's footprint.

Listen as our panel of state and local tax professionals examines the unique taxes imposed by New York City, Los Angeles, San Francisco, Virginia localities, Philadelphia, and municipalities across Kentucky and Ohio, analyzes the interaction between city, county, and state taxing authority, and addresses the planning and compliance challenges these issues create for businesses and their tax advisers.