How to File and Pay City Taxes in Ohio
Navigate Ohio's municipal tax system. This guide clarifies the principles of local tax liability and outlines the procedures for accurate compliance.
Ohio permits municipalities like cities and villages to levy their own local income tax. This tax is separate from the federal income tax paid to the IRS and the state income tax paid to the State of Ohio. Each city or village sets its own income tax rate and collection rules.
This tax is a source of funding for local services like police and fire departments, road maintenance, and public parks. The administration of these taxes varies, as some cities manage their own tax departments while others use regional agencies for collection.
Who Owes Ohio City Income Tax
An individual’s obligation to pay a municipal income tax in Ohio is determined by two factors: where you live and where you work. A person who is a resident of a municipality with an income tax is liable for tax on all of their earned income, regardless of where that income is generated. This means if you live in a taxing city but commute to a job in a different city, your home city still has the authority to tax your wages.
Non-residents also have a tax liability. If you work in a city that has an income tax but live in a different municipality, you are required to pay tax to your work city on the income earned there. The primary tax obligation is to the municipality where the income is earned.
Municipalities tax “earned income,” which includes salaries, wages, tips, commissions, and other forms of compensation, as well as net profits from a business or rental property. Certain types of income are exempt from city-level taxation under state law. This non-taxable category includes:
- Social Security benefits
- Pension and retirement plan distributions
- Interest, dividends, and capital gains
- Military pay
Calculating Your Net Tax Due
Each municipality sets its own tax rate, which is a flat percentage applied to your taxable income. State law caps this rate at 1% unless voters approve a higher one. A credit system is designed to prevent double taxation for individuals who live in one taxing city and work in another. A resident can claim a credit on their home city’s tax return for the amount of tax they were required to pay to their work city, but this credit is limited to the tax rate of the city of residence.
For example, imagine a taxpayer lives in City A, which has a 2.0% tax rate, and works in City B, which has a 2.5% tax rate. The employer in City B will withhold 2.5% from the employee’s wages and remit it to City B. When filing their annual return for City A, the resident will report all their income and calculate the tax due, which is 2.0%.
They can then claim a credit for the taxes paid to City B. Because City A’s tax rate is 2.0%, the credit they can claim is capped at 2.0%, even though 2.5% was paid to City B. This 2.0% credit completely offsets the 2.0% tax liability to City A, resulting in zero additional tax owed. If the work city’s rate was lower than the home city’s, the resident would owe the difference to their home city.
Employer Withholding Requirements
Employers are required to withhold and remit city income taxes for the municipality where an employee performs their work. State law provides a “20-day rule” that applies to employees who work in multiple locations. An employer is not required to begin withholding income tax for a non-resident employee in a particular city until that employee has performed services there for more than 20 days in a calendar year. Once the 21st day is reached, the employer’s obligation is triggered, and they must withhold tax for that city on all wages earned there, including for the initial 20 days.
An exception exists for small employers with less than $500,000 in annual revenue, who may be permitted to withhold solely for their fixed business location. Some employers may also offer to withhold taxes for an employee’s city of residence as a courtesy, but this is not a legal requirement. If an employer does not provide this service, the employee is responsible for paying any tax due to their home city directly.
How to File and Pay City Taxes
To file, you must first identify the correct taxing authority for your municipality. In Ohio, city income taxes are collected through one of three systems: the Regional Income Tax Agency (RITA), the Central Collection Agency (CCA), or a city’s own internal tax department. You can determine which system your city uses by checking its official website or by using the Ohio Department of Taxation’s online lookup tool, “The Finder.”
The filing process involves obtaining the correct forms from the websites of RITA, CCA, or the specific city. Most taxpayers can file their annual municipal tax returns electronically through online portals provided by these agencies. Alternatively, you can mail a paper return to the designated address. Payment for any balance due can be made with the annual return, with acceptable methods including online bank transfers, credit card payments, or mailing a check.
For individuals with significant income not subject to withholding, such as self-employment profits, quarterly estimated tax payments are required if the anticipated annual tax liability exceeds $200. The deadline for filing the annual return is April 15, aligning with the federal deadline, while estimated payments have their own quarterly due dates.