Ohio tax rates: Things to know about taxes in the Buckeye State

Ohioans may love college football, take pride in the Rock & Roll Hall of Fame and view their state as a great place to raise a family. But the state also ranks 19th (around the middle of the pack) for total tax burden, according to the nonprofit Tax Foundation.

Let’s look at some of the taxes you might encounter living and working in Ohio.

• The basics of Ohio taxes
• Ohio state income taxes
• Ohio local income taxes
• Ohio sales and use taxes
• Ohio property taxes
• Ohio inheritance and estate taxes
• Other taxes in Ohio

The basics of Ohio taxes

The Ohio Department of Taxation collects 30 state and local taxes. These include state and school district income taxes, sales tax, business and excise taxes.

Here’s a breakdown of some of the most common types of taxes. For up-to-date information, keep the Ohio Department of Taxation’s website handy. You may find its FAQs page, which covers all areas of Ohio tax, particularly helpful.

Ohio state income taxes

Ohio’s income tax rates have been going down gradually since 2005, according to the Ohio Department of Taxation. Like with federal taxes, Ohio has a progressive income tax system. This means folks who earn more have higher tax rates than lower-income residents.

Here are the Ohio tax rates and brackets for 2019.

Ohio income tax deductions and credits

Ohio offers credits and deductions that can help eligible taxpayers reduce their state income tax obligation.

Here are some that were available in 2018, and which might be available for 2019 as well.

• Ohio residents who received Social Security benefits that were included in their federal adjusted gross income, or AGI, may be able to deduct their benefit amount on their Ohio return.
• If you received military pay and allowances that were included in your federal AGI, you may be able to deduct them on your state return.
• Contributions to an Ohio 529 (CollegeAdvantage) savings plan may be deductible, up to $4,000 per beneficiary, per year.
• You may be able to deduct certain medical and dental expenses that weren’t covered by insurance, or that you weren’t reimbursed for and didn’t pay for with a health savings or flexible spending account. Eligible expenses must exceed a certain percentage of federal AGI in order to be deductible. And you can’t claim them on your Ohio return if you also claimed a deduction for these expenses on your federal return.
• Retirees who have an Ohio income tax base of less than $100,000 may be able to take up to a $200 credit (per return) for qualifying retirement income that was included in their Ohio AGI. Filers who are 65 or older may also qualify for an additional $50 senior citizen credit (per return) if they meet specific income requirements.
• If you qualify for the federal credit for child and dependent care expenses, you may also be able to qualify for the state-level version of the credit. You’ll need to meet Ohio AGI requirements to claim the state credit.
• Filers who qualified for the federal earned income tax credit may also qualify for the state-level credit.

How much is the federal earned income tax credit?

The earned income credit is designed to give a tax break to lower- and moderate-income earners. For 2019, credit amounts range from $529 for eligible taxpayers with no qualifying children to $6,557 for eligible taxpayers with three or more qualifying children.

Ohio local income taxes

Depending on where you live in Ohio, you may have to pay municipal income taxes. Your municipality determines your local income tax rate. These rates may range from 0.5% to 3%, with Ohio’s three largest municipalities — Cincinnati, Cleveland and Columbus — charging more than 2%. Municipalities can’t charge more than 1% without voter approval.

The Ohio Department of Taxation keeps a list of cities and villages with income taxes here. It suggests contacting your local municipality directly with questions about your local income tax rate.

Ohio sales and use taxes

Ohio levies a 5.75% state sales tax rate on all retail purchases and certain types of services (for example, landscaping and lawn services of $5,000 or more). In addition to state sales tax, counties and regional transit authorities can charge an extra 0.25% to 3% sales tax. But state law limits the total sales tax, including state, county and transit authority, to no more than 8.75%.

For example, Columbus, Ohio’s capital, is in Franklin County. Its total state and local sales tax rate is 7.50%.

Ohio has 88 counties. The Ohio Department of Taxation keeps track of county sales tax changes, which may happen quarterly, on this page.

Ohio also has a use tax that applies when sales tax hasn’t been paid on goods or services that should have been taxed. For example, if you buy something from a company out of state, and it doesn’t tack on sales tax, you’ll owe use tax when you file your state tax return. The purpose is to protect Ohio companies from unfair competition with out-of-state sellers.

The use tax rate is the same as the sale tax rate in the county where you use the property or received the taxable service.

Ohio property taxes

If you own real estate in Ohio, you’ll pay local property taxes, which vary based on where the property is located. County and local governments, school districts and special service districts set tax rates for their jurisdictions. But the tax base (the amount of property value the authority can tax) is the same throughout the state — 35% of your property’s market value. But farmland dedicated to conservation practices and enrolled in a federal government conservation program may be eligible for a value of $230 per acre. Auditors reappraise your property’s value every six years and update property values three years after the reappraisal.

To figure out your effective property tax rate, visit your county’s website. It may offer a search tool for you to see your effective tax rate and exactly how much property tax you owe.

If you’re a low-income senior or totally disabled Ohioan, you may qualify for a property tax break called the homestead exemption. The exemption, which is a credit on property tax bills, allows you to shield up to $25,000 of your home’s market value from property taxes, provided you meet the qualifications for claiming the exemption.

Ohio inheritance and estate taxes

Ohio no longer has an estate tax on estates of people who passed away on or after Jan. 1, 2013. If someone died before that, and the gross value of their estate exceeded $338,333, the estate may be subject to Ohio’s estate tax. Gross estate value may include a home, vehicles, bank accounts, business interests, life insurance proceeds, stock and other types of assets.

Other taxes in Ohio

Ohio also has other types of taxes that you may encounter while living, working or visiting in the Buckeye State.

• Alcoholic beverage tax — The alcoholic beverage tax applies to beer, wine, sparkling wine, vermouth, cider and mixed beverages. The tax ranges anywhere from 0.14 cents per ounce for 12-ounce (or smaller) bottles and cans of beer to $1.50 a gallon for sparkling wine and $5.58 for every 31 gallons of beer sold in barrels. The state also has a separate tax on spirits.
• Cigarette and tobacco products tax — The state charges $1.60 per 20-pack of cigarettes.
• Horse-racing tax — Ohio also collects a tax for horse racing. The rates depend on the type of wagering, either pari-mutuel (bettors who back the first three places share a pool of winnings) or exotic (when you bet on more than one outcome).

Bottom line

Whether you live in Ohio, or you’re considering a move, it’s important to understand how taxes may impact your family’s bottom line. Cities with an income tax and higher sales tax rate — like Columbus, for example — may be more expensive.

No matter where you live, it pays to be aware of all the taxes you pay and understand how they affect your finances. It’s possible you could find ways to lower your income tax obligations and save on other types of taxes, which could put more money back into your pocket.