Ohio Tax and CPA Services: State, County and City Taxes

Ohio taxes income in layers. The state sets one income tax, your city or village adds its own, and many school districts add a third. A gross-receipts tax and a state-run workers' compensation system make Ohio unusual. This page covers tax year 2025 returns (filed in 2026) and 2026 planning.

Ohio's three income tax layers

State income tax in 2025 and 2026

The Revised Code sets these rates on nonbusiness income, after exemptions:

Business income is separate. For 2025 and 2026, Ohio deducts the first $250,000 of it ($125,000 for married people filing separately) and taxes the rest at a flat 3%. Ohio defines business income differently than federal law. Social Security benefits are deducted from Ohio income.

You are a full-year resident if your permanent home is in Ohio. The Department weighs your driver's license, vehicle and voter registration, not where you bank. From 2025, eligible people claim the nonresident presumption by checking a box on the IT 10 or IT 1040.

City and school district income tax

Most Ohio cities and villages tax wages and business profits. Cincinnati posts a 1.8% rate (in effect since October 2020), and the Central Collection Agency (CCA) lists Cleveland at 2.50% for 2026. Credit for tax paid to a work city varies: CCA's table shows full, partial and no credit by home city. The Regional Income Tax Agency (RITA) collects for many municipalities and says resident adults must file even when no tax is due.

School district income tax is separate. Employers withhold it for employees who live in a taxing district, using four-digit district codes, and some districts tax a traditional base while others tax earned income at a flat rate.

Remote work and the 20-day rule

Under R.C. 718.011, municipal withholding starts with your principal place of work, the fixed location where you must report on a regular and ordinary basis. An employer generally does not withhold for a city where you worked 20 or fewer days unless that city is your principal place of work, a presumed worksite, or you asked for withholding. A day counts for a city only if you spent more time there than anywhere else that day.

An employee's home is excluded from the "worksite location" definition. Ohio also adopted temporary telework rules during the pandemic, so earlier years may differ. If you split time among cities, check each city's rules. Our multi-state and local tax service handles this, and the local payroll taxes guide covers employers.

The CAT, net profit tax and sales tax

The Commercial Activity Tax (CAT) taxes gross receipts, not profit. A business with $6 million or less of Ohio taxable gross receipts in 2025 or later owes nothing, and above that the rate is 0.26%. An out-of-state business owes CAT only if it also has a "bright-line presence," such as $50,000 or more of Ohio property or payroll or $500,000 or more of Ohio sales (2025 figures).

Profitable businesses also owe municipal net profit tax to each city where they operate, apportioned by property, payroll and gross receipts. Most can opt in by April 15 (calendar-year filers) to have the state collect for every city through the Ohio Business Gateway. Sole proprietors and disregarded entities cannot use that option.

Qualifying S corporations and partnerships can elect to pay Ohio tax at the entity level on the IT 4738, due April 15 after year end. Elections like this are widely used to work around the federal SALT limit but do not help every owner; see our SALT deduction guide.

For 2026, the state sales tax rate is 5.75%. Counties and transit authorities can add up to 3%, with a combined cap of 8.75%. Remote sellers need an Ohio license after more than $100,000 in Ohio sales or 200 separate sales in a year. See our sales and use tax service.

Payroll and workers' compensation

Employers must register for Ohio withholding within 15 days of liability and file electronically. In 2026, bonuses are withheld at 2.75%, and new withholding tables took effect August 1. Under R.C. 4141.01, the 2026 unemployment insurance taxable wage base is $9,000 per employee, administered by the Department of Job and Family Services.

Workers' compensation is unusual. Under R.C. 4123.35, private employers pay premiums into the state insurance fund run by the Bureau of Workers' Compensation unless they qualify to self-insure. See workers' compensation basics.

County auditors value property, with a reappraisal every six years and an update every three.

How we can help

We prepare Ohio IT 1040 and IT 10 returns and municipal returns, review CAT questions, and run payroll services that cover state, school district and city withholding. We also help people moving from Illinois or Pennsylvania into Ohio, including part-year residents and visa holders, and serve the Columbus area remotely.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.