How Much Are Payroll Taxes for Ohio Employers?

Payroll taxes are financial contributions employers must either withhold from employee wages or pay directly to government agencies. These taxes serve to fund various social programs and essential government services. Payroll taxes encompass both federal and state components, and in some areas, local components further add to an employer’s responsibilities.

Understanding Federal Payroll Taxes

Federal payroll taxes include the Federal Insurance Contributions Act (FICA) tax and the Federal Unemployment Tax Act (FUTA) tax. FICA taxes fund Social Security and Medicare. For 2025, the Social Security tax rate is 6.2% for both the employer and employee, applied to wages up to an annual wage base limit of $176,100. The Medicare tax rate is 1.45% for both the employer and employee, applied to all wages without a wage base limit. An additional Medicare tax of 0.9% applies to an employee’s wages exceeding $200,000, though employers do not match this additional amount.

FUTA is an employer-paid tax that funds unemployment compensation programs. The standard FUTA tax rate for 2025 is 6.0% on the first $7,000 of each employee’s wages. Employers receive a credit of up to 5.4% for timely payments to state unemployment tax funds. This credit reduces the effective FUTA tax rate to 0.6% for most employers.

Ohio State Payroll Taxes

Ohio employers are responsible for two state-level payroll tax components: Ohio Unemployment Insurance (SUI) and Ohio Income Tax Withholding. Ohio SUI is an employer-paid tax contributing to the state’s unemployment benefits fund. The rate for new, non-construction employers in Ohio is 2.7% for 2025. New construction employers face a higher new employer rate of 5.6%.

Established businesses have their SUI rates determined by an experience rating, which reflects factors like industry and their history of unemployment claims. For 2025, total contribution rates for experienced employers in Ohio can range from 0.5% to 10.2%, including a mutualized rate. The taxable wage base for SUI in Ohio remains $9,000 for 2025.

Ohio Income Tax Withholding is an employee tax that employers are responsible for collecting and remitting. Ohio has a progressive income tax structure. Employers use withholding tables or formulas provided by the Ohio Department of Taxation to calculate the amount to deduct from employee wages. The amount withheld depends on an employee’s earnings, filing status, and claimed allowances.

Ohio Local Payroll Taxes

Many Ohio cities and villages levy local municipal income taxes on wages. These local tax rates vary across municipalities, ranging from 0% to over 3%. Employers are responsible for withholding these local income taxes based on municipal ordinances. This depends on the employee’s work location, residence, or both.

The varying rates and dual withholding requirements complicate compliance for employers with employees in multiple municipalities. To streamline compliance for many participating cities, central collection agencies like the Regional Income Tax Agency (RITA) and the Central Collection Agency (CCA) manage the collection and administration of these municipal income taxes. Employers must identify the local tax rates applicable to each employee based on their work and/or home address, as there is no single “Ohio local payroll tax” rate.

Ohio Workers’ Compensation Premiums

While not classified as a tax, workers’ compensation is a mandatory employer-paid expense. This system is administered by the Ohio Bureau of Workers’ Compensation (BWC). It provides medical benefits and wage replacement for employees who sustain injuries or develop occupational diseases arising from their employment.

Workers’ compensation premiums are calculated based on several factors, including the employer’s total payroll, the specific job classifications (risk codes) of employees, and the employer’s experience modification rate (EMR). The EMR reflects a company’s safety record and claims history; businesses with fewer claims have a lower EMR and thus lower premiums. Employers must obtain coverage and periodically report their payroll to the BWC for accurate premium calculation and compliance.

Payroll Tax Calculation and Remittance

Employers must accurately calculate and remit payroll taxes. The calculation process involves aggregating all federal, state, and local payroll tax liabilities for each pay period. Many employers utilize specialized payroll software or engage payroll service providers to automate these calculations, ensuring accuracy and compliance with current rates and regulations.

Employers must adhere to specific payment frequencies for federal, state, and local taxes. Federal income tax and FICA taxes are deposited either monthly or semi-weekly, depending on the employer’s total tax liability during a lookback period, and must be made via the Electronic Federal Tax Payment System (EFTPS). For Ohio income tax withholding, remittance frequencies can be quarterly, monthly, or partial-weekly, determined by the amount of tax withheld during a preceding 12-month period, and are made through the Ohio Business Gateway. Ohio SUI taxes are filed and paid quarterly. Local municipal income taxes paid through agencies like RITA or CCA also have varying remittance schedules based on the municipality and employer’s liability.

Employers also have filing requirements to report wages and taxes. Federal forms include IRS Forms 941 (Employer’s Quarterly Federal Tax Return) and 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return), and annual Forms W-2. Ohio employers file state forms such as the Ohio IT 941 (Annual Reconciliation of Income Tax Withheld) and Ohio Unemployment Insurance forms. Local municipal tax forms are also required, often submitted via RITA or CCA.