If you’re considering a move or evaluating your cost of living, understanding local tax burdens is essential. In 2025, the following five U.S. cities stand out for having the highest combined city taxes—including property, income, and sales taxes—making them some of the most expensive places to live from a taxation standpoint.
1. New York City, NY
New York City consistently ranks as one of the most heavily taxed cities in the country. Residents face a trifecta of high taxes:
- City Income Tax: NYC is one of the few U.S. cities that levies its own income tax, with rates ranging from 3.078% to 3.876% depending on income.
- State Income Tax: Combined with New York State’s top marginal rate of 10.9%, high earners can pay over 14% in income taxes.
- Property Taxes: While NYC’s property tax rate is relatively low (around 0.88%), the high property values mean homeowners pay substantial amounts.
- Sales Tax: The combined state and city sales tax rate is 8.875%.
Effective tax burden: A typical household earning $150,000 can pay over $20,000 annually in combined taxes.
2. San Francisco, CA
San Francisco’s tax burden is driven by California’s progressive income tax system and high property values:
- State Income Tax: California’s top marginal rate is 13.3%, the highest in the nation.
- Sales Tax: San Francisco’s combined sales tax rate is 8.625%.
- Property Taxes: While Proposition 13 caps property tax rates at 1%, the median home price exceeds $1.3 million, resulting in annual bills over $13,000.
Additionally, San Francisco imposes local business taxes and fees that increase the cost of living and operating a business.
Effective tax burden: High-income households can face combined tax rates exceeding 15%.
3. Chicago, IL
Chicago’s tax structure is notable for its high city property taxes and layered local levies:
- Property Taxes: Cook County has one of the highest effective property tax rates in the country—around 2.16%—with average bills exceeding $6,000 annually.
- Sales Tax: Chicago’s combined sales tax rate is 10.25%, one of the highest among major U.S. cities.
- State Income Tax: Illinois has a flat income tax rate of 4.95%, but lacks deductions that soften the blow for middle-income earners.
Chicago also imposes taxes on utilities, parking, and even streaming services, adding to the overall burden.
Effective tax burden: A middle-income family can expect to pay over 10% of their income in local taxes.
4. Los Angeles, CA
Los Angeles shares many of the same tax characteristics as San Francisco but with slightly lower property values:
- State Income Tax: Up to 13.3% for high earners.
- Sales Tax: The combined rate is 9.5%, among the highest in California.
- Property Taxes: Capped at 1% under Proposition 13, but median home prices around $900,000 still result in annual bills near $9,000.
Los Angeles also levies local city business taxes and fees that impact residents and entrepreneurs alike.
Effective tax burden: High earners and homeowners face a combined tax load exceeding 12%.
5. Philadelphia, PA
Philadelphia stands out for its unique local high city taxes structure:
- City Wage Tax: One of the few cities with a wage tax, Philadelphia charges 3.79% for residents and 3.44% for non-residents.
- State Income Tax: Pennsylvania’s flat rate of 3.07% adds to the burden.
- Sales Tax: The combined rate is 8%.
- Property Taxes: Lower than other cities at around 1.4%, but still significant due to rising home values.
Philadelphia’s wage tax makes it particularly expensive for workers, especially those commuting from nearby suburbs.
Effective tax burden: Residents can pay over 10% of their income in combined taxes.
Final Thoughts
Living in a high-tax city can significantly impact your disposable income and long-term financial planning. While these cities offer cultural, economic, and professional opportunities, the tax burden is a critical factor to consider. If you’re evaluating relocation or investment options, weigh the benefits against the costs—and explore lower-tax alternatives like Austin, Nashville, or Tampa.