What is local withholding?

This is money that gets taken out of your paychecks and sent to cities, counties, school districts or municipalities. It's the local income tax you pay throughout the year. You can find this amount in box 19 of a W-2. 

Here's an example: If you live in Detroit, you also need to pay income tax to the city of Detroit, in addition to the state of Michigan. Your employer will withhold local Detroit tax from your paycheck, along with the usual federal and state withholding.