What Are Ohio’s State Tax Percentages?

Ohio’s tax system involves various percentages that impact residents and businesses. Understanding these rates is important for managing finances. Ohio levies taxes at both state and local levels, based on income, sales, or other transactions. The total tax burden varies by location and financial activities.

Ohio’s State Income Tax Percentages

Ohio operates a progressive state income tax system for the 2024 tax year, meaning higher income levels are subject to higher rates. Ohio has three income tax brackets, ranging from 0% to 3.50%. These brackets apply to all filing statuses, as Ohio does not differentiate rates by single or joint status.

The lowest bracket taxes income from $0 to $26,050 at 0.000%. Income between $26,051 and $100,000 is taxed at 2.75%. For income exceeding $100,000, the rate is 3.50%. For instance, an individual with a taxable income of $125,000 would pay no tax on the first $26,050, 2.75% on income between $26,051 and $100,000, and 3.5% on the amount over $100,000.

While Ohio does not have a standard deduction, it allows adjustments to income that reduce the taxable amount. Deductions are available for contributions to Ohio 529 college savings plans, up to $4,000 per beneficiary per year. Specific deductions also exist for military members, education expenses, and contributions to certain state-sponsored investment plans.

Other Key Ohio State Tax Percentages

Ohio imposes other significant percentage-based taxes at the state level. The state sales tax is a primary example, set at 5.75%. This tax generally applies to most retail sales of goods and a select list of services.

Counties and regional transit authorities can levy local sales taxes, which raise the combined sales tax rate. The average combined state and local sales tax rate in Ohio is approximately 7.24%. Total sales tax rates vary by location, ranging from 5.75% up to 8% in some areas.

Ohio also has excise taxes on specific goods, levied at a set amount per unit. For instance, alcohol products are subject to excise taxes, such as beer at 18 cents per gallon and wine at 32 cents per gallon. Vendors typically pay these taxes, and some or all of the cost may be incorporated into the retail price.

Understanding Local Income Tax Percentages in Ohio

Beyond the state income tax, many Ohio residents are also subject to local income taxes, which are distinct from the state tax. These local taxes are levied by municipalities and some school districts, often representing a significant portion of the overall tax burden. Most cities and villages in Ohio impose their own income taxes on wages, salaries, and business income.

The percentage ranges for municipal income taxes in Ohio generally fall between 0.50% and 3%. Without voter approval, the maximum municipal income tax rate is capped at 1%. Over 400 Ohio cities and villages have local income taxes, and more than 200 school districts also impose income taxes, ranging from 0.5% to 2%, to fund education.

These local income taxes apply to residents working within the municipality, as well as non-residents who earn income within that municipality. Ohio law includes provisions for tax reciprocity or credits for taxes paid to other municipalities. For example, if a resident of one city works in another city and pays income tax there, their city of residence may offer a credit for the tax paid to the work city. This credit ensures taxpayers are not double-taxed on the same income by different municipalities, though the credit amount may be capped by the resident municipality’s tax rate.