Ohio Taxes for Tax Year 2025 (Filed 2026): Brackets, Local, Sales

Ohio State Taxes filling

This is a Tax Year 2025 guide to Ohio taxes, filed in 2026, with the key rates, examples, and common pitfalls in one place.  

Who Must File and When It’s Due

Most full year and part year Ohio residents file an Ohio individual return (IT 1040). Nonresidents generally file if they have Ohio sourced income. For Tax Year 2025 returns, the filing and payment deadline is April 15, 2026 (unless extended).

 

Personal Income Tax: Progressive but Shallow

  • Ohio personal income tax uses three brackets and applies at the same rates regardless of filing status (single, joint, HOH).
    • 0 % on taxable income up to $26,050
    • 2.75 % on income between $26,051 and $100,000
    • 3.125 % on income over $100,000
  • Ohio does not allow a federal-style standard deduction, but offers a personal exemption up to $2,400 based on income.
  • No bracket difference for married filing jointly or head of household; everyone pays the same marginal rates.
  • Social Security benefits are fully exempt; pensions, IRAs, and 401(k) distributions are taxable but eligible for limited credits for seniors.

 

Business Income vs W-2 Income in Ohio

Ohio separates most wage income (W-2) from qualifying business income (for example sole proprietorship and pass-through business income). Many taxpayers can deduct up to $250,000 of eligible business income each year (or $125,000 if married filing separately). Any remaining taxable business income above that amount is generally taxed at a flat 3% rate.

 

Ohio 529 Plan Deduction

Ohio allows a state income tax deduction of up to $4,000 per beneficiary per year for qualifying 529 contributions. Contributions above the $4,000 limit can be carried forward and deducted in future years until fully used.

 

Local Wage & School District Income Tax

If you live or work in an Ohio municipality or school district with an income tax, expect to pay an extra 0.50 % to 3.00 %, most commonly around 1.00% to 2.00 %.

Combined Ohio‑level rates often stay below 7 % even in taxed cities.

 

School District Income Tax (SD 100)

Some Ohio school districts charge a separate income tax approved by local voters. If you lived in a taxing school district for any part of the year, you may need to file an Ohio SD 100 in addition to your Ohio IT 1040.

 

Reciprocity for Border State Workers

Ohio has reciprocity agreements with Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. If you are a resident of one of these states and your Ohio sourced income is only wages, tips, or commissions, Ohio generally does not tax that wage income. In that case, you usually file and pay income tax to your resident state instead, and you can claim the reciprocity exemption from Ohio withholding using Ohio Form IT 4NR.

If you have other Ohio sourced income besides wages, for example business income or rental income, you may still need to file an Ohio return for that non wage income.

 

Example 1:

Single Full‑Time Worker (Columbus)

  • W‑2 income: $75,000 total taxable OH income
    • First $26,050 taxed at 0% = $0
    • Next $48,950 taxed at 2.75% = $1,346
    • Local Columbus municipal income tax approx. 2.50% = $1,875
  • Total state + local Ohio income tax ≈ $3,221, with an effective rate around 4.3 %

 

Example 2:

Married Retired Couple, Age 70 (Dayton Area)

  • Combined income: $40,000 pension + $20,000 IRA + $25,000 Social Security
  • Taxable income = $60,000 (IRA and pension included; Social Security not taxed)
  • Ohio income tax:
    • First $26,050 at 0% = $0
    • Rest $33,950 taxed at 2.75% = $934
  • Most municipal income taxes focus on earned income (wages and business income); pensions and Social Security are commonly exempt from city tax, but rules can vary by municipality and by income type.

 

Sales & Use Tax

  • State rate is 5.75 %. Counties and transit authorities add local sales tax, so the combined rate typically ranges from 5.75 % up to about 8.00 %, depending on location. Under Ohio rules, the total combined rate (state, county, transit) may not exceed 8.75 %.
  • Many everyday items are exempt in common cases, for example food sold for off premises consumption (takeout and most grocery style food) is generally not subject to Ohio sales tax.
  • Online purchases that are not taxed at checkout may still be subject to Ohio use tax at the same rate; the purchaser must report and pay it.
  • Ohio’s 2025 expanded sales tax holiday ran August 1 through August 14, 2025. During that period, almost all tangible personal property priced at $500 or less per item was exempt from Ohio sales tax, with certain exclusions.

 

Example:

Buying a $1,200 Laptop in Cuyahoga County:

  • State tax: 5.75% = $69.00
  • County/Transit: 2.25% = $27.00
  • Total tax owed = $96.00, for $1,296 total purchase price.

 

Property Tax

  • Ohio imposes no statewide property tax; local governments (counties, schools, cities) collect property taxes.
  • Average effective rate across the state is approximately 1.43 % of fair market value, with major urban areas like Cleveland or Columbus often closer to 1.6 %–2.0 %.
  • Most Ohio counties provide homestead or senior property tax credits or exemptions. Be sure to check your local county auditor’s website each year for updates.

 

Example:

Homeowner in Franklin County (Columbus Metro)

  • Market value: $280,000
  • Effective rate: 1.48 %. Therefore, 280,000*0.0148= $4,144/year property tax, pre‑relief
  • Eligible seniors (over age 65) with household incomes under $40,000 may reduce taxable value up to $28,000 under homestead exemption.

 

Commercial Activity Tax (CAT)

  • Ohio does not have a general corporate income tax; instead businesses pay a Commercial Activity Tax on gross receipts above a threshold.
  • Effective January 1 2025, the exclusion threshold was raised to $6 million. Receipts above that are taxed at 0.26 %.
  • This applies to all entities, including sole proprietorships, partnerships, S-corps, C-corps, and non-profits, though some exclusions may apply.

 

Example:

Digital‑marketing LLC in Cincinnati

  • Annual gross receipts: $8 million
  • Taxable amount: $8M – $6M exclusion = $2M
  • Ohio CAT owed: 0.26% × $2M = $5,200

 

No Estate or Inheritance Tax

  • Ohio repealed its state estate tax effective January 1, 2013. There is currently no state estate or inheritance tax.
  • Only federal estate tax may apply to significant estates over the 2025 threshold of $13.99 million.

 

Why Ohio’s System Stands Out?

  1. Pension and Social Security friendly: Social Security benefits are never taxed, while IRAs and 401(k)s may qualify for limited credits for retirees.
  2. Municipal income taxes require careful planning: you may owe taxes in multiple cities depending on where you live and work.
  3. Sales tax varies by county; use the Ohio Tax Rate Finder (below link) to calculate your combined rate before major purchases.
  4. The Commercial Activity Tax applies to gross receipts, not net income: keep records clean and note that deductions are limited.
  5. Property taxes high in dollar amounts but not as % of home value; senior homeowners should apply for relief programs.