Investopedia offers a complete definition of income tax and how many government agencies use this tax to fund activities. However, unlike other cities and counties, Sherman County municipalities fund themselves in ways that do not require additional taxes on resident and business income. This lack of municipal taxation in Sherman County can lead to a tax savings for you of up to 3.65% every year. (Note that residents must still pay Oregon state taxes and federal U.S. taxes; see Free File for free, online options.)