41 CFR § 302-17.42 - Applicable local marginal tax rate(s) used for calculation.

(a) If an employee incurs a local tax liability, the agency will validate the applicable local marginal tax rate(s) and use it (them) in the CMTR formula.

(b) If an employee incurs a local income tax liability in more than one locality, then the agency should follow the rules described for State income taxes in § 302-17.41 to calculate the local marginal tax rate that will be used in the CMTR formula and to compute the RITA, and the employee should follow the rules in § 302-17.41 to determine their actions.

(c) If a locality in which an employee incurs income tax liability publishes its tax rates in terms of a percentage of the Federal or State taxes, then the agency must convert that tax rate to a percentage of the employee's income to use it in computing the CMTR. This is accomplished by multiplying the applicable Federal or State tax rate by the applicable local tax rate. For example, if the State marginal tax rate is 6 percent and the local tax rate is 50 percent of State income tax liability, the local marginal tax rate stated as a percentage of taxable income would be 3 percent.