Calculating Your Ohio 1099 Tax Obligations

As an independent contractor or freelancer in Ohio, you are personally responsible for managing your tax obligations. There is no single “1099 tax rate” in the state. Your total liability is a combination of federal, state, and sometimes local taxes, each with its own rules and rates.

Your income is subject to federal self-employment and income taxes. Following that, Ohio imposes its own state income tax, and many municipalities and school districts add another layer of local income tax.

Federal Tax Obligations for 1099 Earners

The primary federal obligation for 1099 earners is the self-employment tax, which covers contributions to Social Security and Medicare. The self-employment tax rate is 15.3%. This rate is composed of two parts: 12.4% for Social Security and 2.9% for Medicare.

This 15.3% rate is applied to 92.35% of your net earnings from self-employment. For 2025, earnings up to $176,100 are subject to the Social Security portion of the tax. All of your net earnings are subject to the 2.9% Medicare tax.

In addition to self-employment tax, you must pay federal income tax on your business profits. The amount you owe is determined by progressive federal income tax brackets, with rates ranging from 10% to 37% for 2025.

You can deduct one-half of what you pay in self-employment taxes. This deduction lowers your adjusted gross income (AGI), which reduces the amount of income subject to federal income tax. The adjustment is made on your Form 1040.

Ohio State and Local Tax Obligations

Ohio imposes a progressive state income tax with rates ranging from 0% to 3.5%. This structure means different portions of your income are taxed at different rates. For instance, taxable income up to $26,050 is not taxed at the state level.

Income between $26,051 and $100,000 is taxed at 2.75%, and income exceeding $100,000 is taxed at 3.5%. These rates apply to your Ohio taxable income, which is calculated after state-specific adjustments and deductions.

Beyond state tax, many Ohio independent contractors are also subject to local income taxes. Numerous municipalities and school districts levy their own income taxes, with rates that can reach as high as 3%. These local taxes are based on where you live and conduct business.

You are responsible for determining the rates for your specific municipality and school district and remitting the correct amount. Some municipalities offer tax credits to prevent double taxation if you work in one city but live in another, though this is not universal.

Calculating Your Ohio Taxable Income

Your tax calculation begins at the federal level by determining your net earnings on the federal Schedule C, “Profit or Loss from Business.” You calculate this by subtracting ordinary and necessary business expenses from your gross income. Common deductions include vehicle mileage, home office expenses, business-related travel, and the cost of supplies.

Ohio offers a Business Income Deduction (BID), which allows qualifying taxpayers to deduct a large portion of their business income. For single or married joint filers, the first $250,000 of business income is fully deductible. For those married filing separately, the deduction is capped at $125,000.

This deduction is available to sole proprietors and owners of pass-through entities like S corporations, partnerships, and LLCs. Any business income that exceeds the threshold is taxed at a flat rate of 3%. The BID is calculated on the Ohio Schedule of Business Income.

For example, if a single freelancer has a net business income of $300,000, the first $250,000 is fully deductible. The remaining $50,000 is then taxed at the 3% flat rate. This results in an Ohio tax of $1,500 on that business income.

Paying Your Taxes Throughout the Year

Since taxes are not withheld from 1099 income, you must pay them throughout the year via quarterly estimated tax payments. These payments to the IRS and the Ohio Department of Taxation should cover your projected self-employment, federal, and state income tax liability for the year.

Quarterly payments are due on April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or holiday, the payment is due on the next business day.

For federal payments, you can use IRS Direct Pay, pay by credit or debit card, or mail a check with a voucher from Form 1040-ES, “Estimated Tax for Individuals.” This form includes a worksheet to help calculate your quarterly payment amount.

For Ohio state taxes, payments can be made online through the OH|TAX eServices portal, by credit or debit card, or by mail using the Ohio Universal Payment Coupon (OUPC). You must also make separate payments for any local income tax owed to the appropriate municipal tax agency.