Ohio State Tax Guide 2025: Navigating Your Tax Return

• admin
• February 24, 2025
• 6 min read

Ohio State Tax Guide 2025: Navigating Your Tax Return

Understanding Ohio’s tax system is crucial for residents aiming to manage their finances effectively. This comprehensive guide delves into the state’s tax structure for 2025, covering income tax brackets, filing requirements, and options for tax extensions.

Key Takeaways

• Income Tax Rates: Ohio’s income tax rates range from % to 3.5%, with specific brackets based on income levels.
• Filing Requirements: Residents with income above $26,050 are required to file a state tax return.
• Tax Extensions: Options are available for taxpayers needing additional time to file their returns.

Ohio Income Tax Structure

In 2025, Ohio maintains a progressive income tax system with the following brackets:

• $ to $26,050: %
• $26,051 to $100,000: 2.75%
• Over $100,000: 3.5%

For instance, if your taxable income is $50,000, the first $26,050 is taxed at %, and the remaining $23,950 is taxed at 2.75%, resulting in a total state tax of approximately $658.

Filing Your Ohio Tax Return

Ohio residents with income exceeding $26,050, including social security benefits when applicable, are obligated to file a state income tax return. The primary form used is the IT 104, which can be accessed through the Ohio Department of Taxation’s website. Ensure you gather all necessary documents, such as W-2s, 1099s, and records of other income sources, to accurately complete your return.

Local Taxes

Many Ohio municipalities impose local income taxes in addition to state taxes. These rates vary by locality and can range from .5% to 3%. It’s essential to check with your local government or the Regional Income Tax Agency (RITA) to determine your local tax obligations.

Tax Extensions

If you’re unable to file your Ohio tax return by the April 15 deadline, you can request an extension. Filing for a federal extension using Form 4868 automatically grants you an Ohio extension. However, this extension applies only to filing, not to payment. To avoid penalties, estimate and pay any taxes owed by the original due date.

Sales and Property Taxes

Ohio’s state sales tax rate is 5.75%, with localities adding up to 2.25%, leading to an average combined rate of approximately 7.24%. The average effective property tax rate is 1.3% of a home’s assessed value. These rates can vary based on location and specific circumstances.

Tax Credits and Deductions

Ohio offers various tax credits and deductions to residents, including:

• Joint Filing Credit: Available to married couples filing jointly, potentially reducing tax liability.
• Retirement Income Credit: For taxpayers receiving retirement benefits, subject to certain conditions.
• Earned Income Credit: A state credit for those who qualify for the federal Earned Income Tax Credit.

Review the Ohio Department of Taxation’s resources to determine your eligibility for these credits and deductions to maximize your tax savings.

Business Taxes in Ohio

Ohio businesses are subject to various state and local taxes, depending on their structure and operations. Below are the primary business tax obligations in Ohio for 2025.

1. Commercial Activity Tax (CAT)

Ohio does not impose a corporate income tax, but businesses with gross receipts exceeding $150,000 per year must pay the Commercial Activity Tax (CAT). The tax rates are:

• $150,000 to $1 million in gross receipts → $150 minimum tax
• $1 million to $2 million → $800 minimum tax
• $2 million to $4 million → $2,100 minimum tax
• Over $4 million → $2,600 minimum tax + 0.26% on receipts above $1 million

Businesses must register with the Ohio Department of Taxation and file CAT returns quarterly or annually, depending on their revenue.

2. Sales and Use Tax

Businesses selling goods or taxable services in Ohio must collect state and local sales tax from customers. The state sales tax rate is 5.75%, but counties and municipalities can add additional taxes, bringing the total rate to up to 8% in some areas.

Companies purchasing goods for resale or exempt purposes can obtain a resale certificate to avoid paying sales tax.

3. Employer Payroll Taxes

If your business has employees, you must withhold and remit the following taxes:

• State income tax withholding – Businesses must withhold Ohio income tax from employees’ wages and submit payments to the state.
• Unemployment Insurance (UI) Tax – Employers pay a state unemployment tax (SUTA), with rates varying based on industry and claims history.
• Municipal Payroll Taxes – Many Ohio cities impose local income taxes on employees’ wages, which employers must withhold and remit.

4. Business Tax Filing & Extensions

Ohio businesses that need extra time to file state tax returns can apply for an extension. However, extensions only apply to filing, not payment—businesses must estimate and pay any taxes due by the original deadline to avoid penalties.

Frequently Asked Questions (FAQs)

Who is required to file an Ohio state tax return?

Ohio residents earning over $26,050 must file a state tax return. Nonresidents or part-year residents with Ohio-sourced income may also be required to file.

What if I need more time to file my Ohio tax return?

You can request a tax extension by filing for a federal extension (Form 4868), which will automatically apply to Ohio. However, any tax owed must still be paid by the original due date to avoid penalties.

How do I pay my Ohio state taxes?

Taxes can be paid online via the Ohio Department of Taxation website, through electronic funds transfer, by credit/debit card, or by mailing a check with the appropriate payment voucher.

Does Ohio have local income taxes?

Yes, many municipalities impose local income taxes ranging from .5% to 3%. These are collected separately from state income tax and must be filed with the relevant local tax authority.

Are there any tax credits available in Ohio?

Yes, Ohio offers various tax credits, including the Joint Filing Credit, Retirement Income Credit, and Earned Income Credit. Check the Ohio Department of Taxation’s website for eligibility details.

Navigating Ohio’s Tax Landscape

Ohio’s tax system includes state income taxes, local taxes, sales taxes, and property taxes, making it essential for residents to stay informed. Understanding tax brackets, filing deadlines, and available credits can help you minimize your tax burden. Whether you’re a full-time resident or a newcomer to Ohio, proper tax planning can ensure a smooth and stress-free filing experience.

For the most up-to-date information, visit the Ohio Department of Taxation. If you need more time to file your taxes, consider exploring state tax extensions to ensure compliance without stress.