Yes, Ohio charges both state and local income tax

Ohio has a state income tax that applies to wages, self-employment income, and other earnings. The state tax rate ranges from 0.5% to 5.75% depending on your income bracket. On top of that, many Ohio cities and counties charge their own local income tax, which can add another 1% to 2.5% to what you owe. Your total tax burden depends on where you live and work within the state.

Unlike some states, Ohio does not tax retirement income the same way it taxes wages. Social Security benefits are not taxed by Ohio. Pension income and distributions from retirement accounts have different rules depending on the type of account and your age, which is covered in the sections below.

Key Takeaways

  • Ohio's state income tax ranges from 0.5% to 5.75% based on your income level, with rates applied in brackets similar to federal tax.
  • Many Ohio cities and counties add their own local income tax on top of state tax, ranging from 1% to 2.5% depending on where you live.
  • Social Security benefits are not taxed by Ohio, but pension and retirement account withdrawals may be taxed depending on the account type.
  • If you work in Ohio but live in another state, or vice versa, you may owe tax to both states and can claim a credit to avoid double taxation.

How Ohio's state income tax brackets work

Ohio uses a progressive tax system with eight tax brackets. Your income is taxed at different rates as it moves into higher brackets, not all at one rate. For the 2024 tax year, the brackets start at 0.5% on the lowest income and climb to 5.75% on income above a certain threshold. The exact dollar amounts for each bracket change yearly based on inflation adjustments.

You calculate your Ohio state tax on your federal taxable income, which means deductions you take on your federal return also reduce your Ohio tax. If you file federal taxes, you already have most of the information you need to file Ohio taxes. The state provides worksheets and tax software that walk through the calculation step by step.

Local income tax in Ohio cities and counties

About 600 cities and villages in Ohio, plus some counties, charge their own income tax on residents and sometimes on people who work within their borders. These local taxes are separate from state tax and are added on top of it. Rates vary widely—some municipalities charge 1%, others charge 2.5% or more. A few Ohio cities have no local income tax at all.

Your employer may already withhold local tax from your paycheck if you work in a city that charges it. If you live in one municipality but work in another, you may owe tax to both places, though most cities offer a credit to prevent paying tax twice on the same income. Check your city or county's tax department website or call them directly to find out what rate applies to you.

What income is taxed and what is not

Ohio taxes wages, salaries, self-employment income, and business profits. Interest and dividend income are also taxed. However, Social Security benefits are not subject to Ohio income tax, even if you have other income. This is one of the few breaks Ohio offers retirees.

Pension income is taxed differently depending on the source. Military pensions and some government employee pensions have special exemptions. Distributions from traditional IRAs and 401(k) accounts are taxed as ordinary income. Roth IRA withdrawals of contributions (not earnings) are not taxed. If you receive income from rental property, capital gains, or other sources, those are generally taxed as well.

Tax withholding and quarterly payments

If you are an employee, your employer withholds state and local income tax from each paycheck based on the W-4 form you fill out. The withheld amount is sent to Ohio and your municipality on your behalf. Most employees have enough withheld that they do not owe additional tax at filing time.

If you are self-employed or have income that is not subject to withholding, you may need to make quarterly estimated tax payments to Ohio. These are due on April 15, June 15, September 15, and January 15. Missing these payments can result in penalties and interest. The Ohio Department of Taxation provides worksheets to calculate what you owe each quarter.

Working across state lines: credits and reciprocal agreements

If you live in Ohio and work in another state, or live outside Ohio and work in Ohio, you may owe income tax to both states. Ohio has reciprocal tax agreements with Kentucky, Indiana, Pennsylvania, and West Virginia. These agreements generally mean you pay tax only to the state where you live, not where you work, if you live in one of those states and work in Ohio.

If you work in a state without a reciprocal agreement, you typically pay tax to the state where you earn the income and can claim a credit on your Ohio return for taxes paid to the other state. This prevents you from being taxed twice on the same earnings. The credit is limited to the amount of Ohio tax you would have owed on that income.

Filing your Ohio income tax return

Ohio residents file their state income tax return using Form IT 1040 (the long form) or Form IT 1040-SR (for seniors). You must file if your income exceeds the filing threshold, which changes yearly. Even if you do not have to file, you may want to if you had taxes withheld and are due a refund.

You can file online using Ohio's e-file system, by mail, or through tax software that supports Ohio returns. The important date is the same as the federal important date, usually April 15. If you need more time, you can request an extension, but extensions only delay filing—you still owe any tax due by April 15 or face penalties and interest.

Frequently Asked Questions

Do I have to pay Ohio income tax if I just moved to the state?

You owe Ohio income tax on income earned after you become a resident. Your residency date depends on when you establish a permanent home in Ohio with the intent to stay. If you moved mid-year, you may owe tax to both your old state and Ohio for the portions of the year you lived in each place.

What is the difference between state and local income tax in Ohio?

State income tax goes to Ohio and funds state services. Local income tax goes to your city or county and funds schools, police, and local services. Both are withheld from your paycheck if you live or work in a place that charges them. Your total rate is the sum of both.

Can I deduct Ohio income tax on my federal return?

Yes, you can deduct state and local income taxes (SALT) on your federal return, but only up to $10,000 per year. This limit applies to the combined total of state income tax, property tax, and sales tax. Most people use the standard deduction instead, which is higher for many filers.

Does Ohio tax retirement income differently than wages?

Social Security is not taxed. Pensions and retirement account withdrawals are taxed as ordinary income, with some exceptions for military and government pensions. The tax rate depends on your total income and which bracket you fall into, the same as for wages.

What happens if I do not pay my Ohio income tax?

The Ohio Department of Taxation can place a lien on your property, garnish your wages, or intercept your state and federal tax refunds. Penalties and interest accrue on unpaid tax. If you cannot pay in full, you can contact the department about a payment plan or offer in compromise.