Tax in Ohio: a complete guide
This Ohio tax guide will help simplify the state's diverse tax responsibilities, covering everything from income tax brackets to property tax intricacies.
Ohio state income tax
All US citizens and residents must pay federal income tax. As of 2023, there are seven different federal income tax brackets. This dictates how much federal tax you’ll pay each year.
Many states also impose their own state tax on top of federal taxes. Ohio has a relatively light state income burden, with the highest bracket of just 3.99 percent.
In total, Ohio has five tax brackets:
| Ohio taxable income | Tax rate | Tax owed |
|---|---|---|
| Ohio taxable income | Tax rate | Tax owed |
| $0—$26,050 | 0 percent | None |
| $26,051—$46,100 | 2.76 percent | $360.69 plus 2.76 percent of the amount over $26,050. |
| $46,101—$92,150 | 3.22 percent | $915.07 plus 3.22 percent of the amount over $46,100. |
| $92,151—$115,300 | 3.68 percent | $2,400.64 plus 3.68 percent of the amount over $92,150. |
| $115,301 and over | 3.99 percent | $3,254.41 plus 3.99 percent of the amount over $115,300. |
While Ohio does not have its own standard deduction, certain adjustments can be made to your income and how much tax you pay. For example, Ohio does not tax income from Social Security. It also has specific deductions for military members and education and medical expenses.
These factors are important to note for Ohio residents and part-time residents, as well as those who get their income from an Ohio-based source. For example, if the company you work for is based in Ohio but you live in neighboring Indiana, you may need to file a state tax in Ohio.
If you’re unsure about filing your taxes, a financial advisor can help. Here, they can review your income sources and develop a unique tax strategy just for you.
Ohio sales tax
Ohio has a statewide sales tax rate of 5.75 percent. However, it's important to note that counties and regional transit authorities may levy additional sales and use taxes. The maximum they can levy is 2.25 percent, bringing the total sales tax rate to nearly 8 percent in some areas.
While many goods and services are subject to sales tax, Ohio does provide certain exemptions. Common exempt items include:
Groceries – most food items for human consumption are exempt from sales tax. However, prepared food, like restaurant meals, may still be subject to tax.
Prescription Medications – prescription drugs are generally not subject to sales tax.
Clothing – items priced at $75 or less per item are usually exempt from sales tax.
Manufacturing Equipment – machinery and equipment used in manufacturing are often exempt from sales tax to promote business growth and job creation.
Education Services – educational services, such as tutoring or private lessons, are typically not subject to sales tax.
Ohio property tax
Ohio's average property tax rate was approximately 1.52% of the property's assessed value. However, it's important to note that property tax rates can vary widely across different counties and municipalities within the state.
How is property tax in Ohio calculated?
In Ohio, property tax is based on its current market value. The county auditor determines this value, considering the property's size, location, and condition. The assessed value is then used to calculate property taxes.
Rates can vary across the state as rates vary significantly between different counties and even within different municipalities within the same county, as local governments can set their property tax rates.
It’s worth noting Ohio offers a Homestead Exemption program that provides property tax relief for qualifying senior citizens and disabled individuals.
Ohio motor tax
Ohio collects a 5.75 percent state sales tax rate on the purchase of all vehicles. As mentioned, this can be higher when incorporating specific county taxes.
Those buying a vehicle in Ohio must also factor in fuel taxes. Regular gas is taxed at $0.39 per gallon, and diesel is taxed at $0.47 per gallon.
Ohio estate tax
Ohio does not have estate tax.
However, federal estate tax can still apply if your estate is above a certain threshold ($12.92 million in 2023); otherwise, there will be no fees on the estate or inheritance you leave behind.
However, if you live in Ohio but inherit an estate from someone in a state with estate tax, you’ll need to check your local regulations, as you might be liable to pay fees on the inheritance in your state.
Ohio retirement tax
Ohio's tax policies can significantly impact retirees' financial planning, and understanding how retirement income is taxed is crucial.
Retirement income – including savings in a 401(k), IRA, other savings account, and government pensions – is taxed in Ohio. However, Ohio offers a retirement income credit, which can help offset some tax liability on retirement account withdrawals.
Ohio also has some income tax exemptions, which could prove useful to retirees. As mentioned, Social Security income is not taxed. Some railroad retirement and military benefits are also tax-exempt.
Certainly, Ohio offers numerous advantages for its residents. However, conducting thorough financial research is essential if you plan to relocate for retirement and embark on your next chapter.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.