In a companion paper, a canonical bijection was established between strong formal subdivisions of lower Eulerian posets and triples consisting of a lower Eulerian poset, a corresponding rank function, and a non-minimal element such that the join with any other element exists. The main goal of this paper is to relate the local $h$-polynomials of a strong formal subdivision to the Kazhdan-Lusztig-Stanley (KLS) invariants associated to its corresponding lower Eulerian poset under this bijection. As an application, we show that Braden and MacPherson's relative $g$-polynomials are alternative encodings of corresponding local $h$-polynomials. We also further develop equivariant KLS theory and give equivariant generalizations of our main results, as well as an application to equivariant Ehrhart theory.