Republic of Croatia is a unitary state which is administratively divided into municipalities, cities and counties. Local self-government makes up for 555 units of self-government, with 428 of those being counties and 127 cities. Regional self-government makes up for further 20 units and the city of Zagreb as the capital of the Republic of Croatia has a special states as both a city and a county. In total the number of local and regional self-government units is therefore 576. In order to pay for the expenses created by the services of the state administration, the government levies taxes which are one of the most usual sources of income for the state. After gaining independence, introducing democratic changes and switching to a market economy, the tax system of the Republic of Croatia has undergone several changes as a result of new public policies in fiscal and tax domain, but also of Croatia joining various international associations and entering into international agreements. In the context of this topic, one of numerous categorizations of taxes is important because the criterion of differentiating individual taxes is which entity benefits from the tax. In accordance with this, six types of taxes which make up the tax system of the Republic of Croatia can be distinguished: 1. State taxes, 2. County taxes, 3. City or municipality taxes, 4. Common taxes, 5. Taxes on income from games of chance and contributions for organizing games of chance, 6. Contributions for organizing games of chance. This thesis analyses in detail the local taxes and income tax, which is in the category of common taxes, but with regard to distribution of funds from its levying, it is de facto a local tax.