How Much Does Ohio Take Out for Taxes?

Ohio’s tax structure is comprehensive, involving multiple layers of taxation that contribute to the overall amount residents and businesses contribute to public services. The total tax burden in Ohio is influenced by state-level taxes, local government levies, and property assessments, each with its own set of rules and rates. The specific amount an individual or entity pays can vary considerably depending on income, location, spending habits, and property ownership.

Ohio State Income Tax Rates

Ohio operates a progressive state income tax system. For the 2024 tax year, the state income tax is calculated using a few brackets. Taxable nonbusiness income up to $26,050 is not subject to state income tax. Income between $26,051 and $100,000 is taxed at 2.75%, while income exceeding $100,000 is taxed at 3.5%.

Taxable income for state purposes generally begins with federal adjusted gross income, with certain modifications. Deductions and credits can reduce the amount of income subject to taxation or directly lower the tax liability. For example, Ohio offers a $50 non-refundable senior citizen credit for taxpayers aged 65 or older.

Individuals receiving retirement income may also qualify for a credit, depending on their modified Ohio adjusted gross income. This retirement income credit can be up to $200. There is also a one-time lump-sum retirement credit available for those who received a total lump-sum distribution from a pension or retirement plan, provided they have not claimed this credit before.

Local Income Taxes in Ohio

Beyond the state income tax, many cities and villages in Ohio impose their own municipal income taxes. These local taxes vary significantly in rates and rules across different municipalities. Typically, these rates can range from approximately 1% to 3% of taxable income. The application of these taxes usually depends on where an individual lives or where they work, or sometimes both.

To prevent double taxation on the same income, Ohio law often provides a credit for taxes paid to other municipalities. If a resident works in a city different from their home city, and both levy a municipal income tax, the resident’s home city often provides a credit for the taxes paid to the work city.

These local income taxes apply to a broad range of individuals, including residents earning income within the municipality and non-residents who work within the municipality’s borders. The specific rules for who is subject to the tax and how credits are applied can be complex and are determined by each local tax ordinance.

Ohio Sales and Use Tax

Ohio levies a statewide sales tax on the retail sale of most tangible personal property and certain services. The current state sales tax rate is 5.75%. In addition to this state rate, counties and regional transit authorities can impose their own local sales taxes. This results in combined sales tax rates that vary by county, ranging from 5.75% up to 8%. For example, some counties might have a combined rate of 7.25%, while others could be as high as 8.0%.

Many common goods and services are subject to this sales tax, including clothing, household items, and certain digital goods. However, there are notable exemptions. Most food purchased for home consumption is exempt from sales tax, as are prescription drugs.

The use tax is a companion to the sales tax and applies when sales tax was due on a purchase but not collected by the seller. This commonly occurs with purchases from out-of-state vendors or online retailers. In such cases, the consumer is responsible for remitting the use tax directly to the state.

Property Taxes in Ohio

Property taxes in Ohio are assessed and collected at the local level by county governments. The process begins with the county auditor determining the market value of real property. For tax purposes, the assessed value of a property is typically 35% of its market value. This assessed value is then used in conjunction with local millage rates to calculate the property tax bill.

Millage rates represent the amount of tax per $1,000 of assessed value. One mill equals $1 of tax for every $1,000 of assessed value. These rates vary significantly by location within each county, as they are determined by the cumulative levies approved by voters for local services such as schools, libraries, and police and fire departments.

Several credits and exemptions can reduce the amount of property tax owed by eligible homeowners. The Homestead Exemption is available to senior citizens (aged 65 or older), permanently disabled individuals, and qualifying disabled veterans. For example, the Homestead Exemption reduces the amount of the home’s value that is taxed by $26,200 for eligible seniors and disabled persons, a figure that is adjusted for inflation. Additionally, the Owner-Occupied Tax Reduction, also known as the 2.5% Non-Business Credit, provides a 2.5% reduction on qualified levies for owner-occupied primary residences.