Taxes can be one of the most confusing aspects of Cities: Skylines 2, you have to walk a fine line between not going into debt and keeping your citizens happy. Since you can get so specific about how each district, Residential, Commercial, Industrial, and Office, is taxed, determining the best rate among them all is a whole process in itself. Thankfully, the process isn't as difficult as it may initially seem.

Every mayor is looking to make money fast, and an excellent way to accomplish this is by learning how to export water and electricity. However, that alone won't keep you afloat. As a result, you must properly manage your taxes to prevent your city from going under. When handled correctly, taxes can be one of your city's most profitable revenue sources. That may seem like a pipe dream right now, but with a fine-toothed comb and some patience, you can begin profiting from your city's taxes.

Tax Rate Guide for Cities: Skylines 2

Because everyone's city is built differently in Cities: Skylines 2, it's best to look at what you should avoid with taxes before getting into the nitty-gritty of managing it. While taxes can increase revenue, they can also drive your city into bankruptcy if mismanaged.

Main Goal to Avoid With Taxes

First and foremost, the goal of setting your taxes should be to get the "Estimated Total" in the "Taxation" tab to be in the plus, or positive. If it is in the negative, then the game will automatically start giving you government subsidies. Although these are great to help get your city started, your ultimate goal should be to earn money from your taxes so you can stop relying on government subsidies.

The Basic Principles

Although it will take some time before you reach these numbers, these are the three general rules of thumb the most impressive cities follow when it comes to taxes:

• Keep taxes low at first and increase them slowly.
• Keep Residential between 10% and 15%.
• Halt Commercial, Industrial, and Office at 15%.

First, you should keep your residential and commercial taxes low until your city has a reasonable population. Aim for at least 10,000 people before you start increasing taxes. After that, you can gradually increase your taxes. If you do it quickly, your citizens won't be able to keep up with the jump, and you won't notice until it's too late to turn things around. So, raise taxes gradually, and if citizens begin to fall behind, don't go any further. Patience pays dividends in the tax game in Cities: Skylines 2.

The next thing you'll want to avoid with taxes is having them so high that people start leaving your city. As a result, as you fine-tune your taxes, you should always check Chirper and the Demands tab to see if your citizens are complaining about your tax changes. Some cities will be able to increase the residential tax rate to 15%, while others will be limited to 12%. So you must play around until you find the best rate for your city and its residents.

It's okay if your citizen's happiness is at a -1 with taxes, as they won't leave your city. However, you'll start seeing some people go if you let it drop beyond that.

Getting Specific With Taxes

Although following those basic principles will do your city just fine, you can get even more specific about taxes.

Lowering taxes in residential zones will increase demand. Raising them, on the other hand, reduces demand for housing, which is another reason why taxes should be raised slowly. Furthermore, you can tax based on education level in the Residential Zone.

Higher-educated people can be taxed more because they will work higher-paying jobs. However, be sure to keep taxes low for the uneducated as they will attend school if it is affordable. This will result in more people becoming educated and working higher-paying jobs, which in turn, will benefit you by profiting from the taxes of more highly-educated people, as well as increased workplace efficiency.

Every tax in the game can be set between -10% and 30%.

The final trick under the Industrial or Office taxation tabs is to set the tax for a specific type of production you want in your city to -10%. That's because this will create a high demand for new businesses to begin manufacturing that specific product. So, if you've just started harvesting a lot of crude oil and want to get businesses to focus on it, lower the taxation to drive demand up, then gradually raise it back to normal. This is one of the most effective ways to have your city specialize in a specific industry in Cities: Skylines 2.