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150 City Tax
City tax is withheld for the city where the employee works and/or resides. This is determined by the city taxing authority. If an employee’s duty station and residence have mandatory city taxes, the duty station city tax will take precedence.
If the city ordinance contains provisions which allow an employee to waive or claim exemption from the tax, an exemption certificate of FMS-7311, Employee’s Withholding Certificate for Local Taxes (City or County) must be processed indicating the employee is not liable for the tax.
A city tax reduction is allowed if the employee performs 25 percent or more of their work outside the duty station city and wishes to have the withholding amount reduced to the appropriate tax liability. The percentage of time the employee works outside the duty station city should be entered. If not entered, the percent of taxes will be withheld on the total wage amount.
If an employee is transferring into PPS or transferring from one Department to another within PPS, the city taxes deducted YTD should be carried forward to PPS to prevent overpayment of city tax for cities that have maximum annual tax amounts. For information about entry of YTD data, see .
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