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The Real Story on Ohio's Taxes

Low taxes...so you keep more profit.

In Enterprise Appalachia, we know that making your new entrepreneurial venture profitable is a real challenge. Equally important is keeping as much of the profit you make as possible.

That is why the state tax structure in Ohio was purposefully designed to stimulate entrepreneurial and start-up activity. The unique tax structure encourages profitability and wealth creation.

Here are three key highlights:

  1. You can confidently invest in your company growth and operating efficiency. Investments in machinery and equipment, furniture and fixtures, and inventory are tax-free (except for public utilities).
  2. You are encouraged to serve your customers from an Ohio base. Sales to customers outside of Ohio will not increase your tax burden.
  3. You get to keep more of the profit you earn. Companies with total sales under $1 million only pay a $150 fee. Companies with total sales under $150,000 are exempt from Ohio's state business tax.

How does Ohio's state tax burden compare with other nearby states?

Ohio Tax Case Study 1

Ohio Tax Case Study 2

NOTES

1. Data Source(s): Ohio Department of Development; State of Ohio Department of taxation, Commerce Clearing House, Federation of Tax Administrators, and each state's Department of Taxation / Revenue.

2. Examples only consider direct state business taxes. The examples do not reflect the application of various local business taxes (i.e., real and personal property tax, local business tax) as well as local service charges and user fees.

3. Case #1: Total sales (i.e., net gross receipts) of $1,000,000; Expected profit margin of 5.0%, with 100% of sales in-state. Purchase of $500,000 in personal property (required for State of Michigan tax calculations).

4. Case #2: Total sales (i.e., net gross receipts) of $5,000,000; Expected profit margin of 5.0%, with 50% of sales in-state and 50% of sales to out-of-state customers; Purchase of $1,500,000 in personal property (required for State of Michigan tax calculations. In addition, the State of Ohio Revised Code Section 5751.01 requires the commercial activity tax is paid by all businesses that either:

  • Have at least $500,000 in taxable gross receipts in Ohio, or;
  • Have at least $50,000 in property in Ohio, or;
  • Expend at least $50,000 in payroll for work in Ohio, or;
  • Have at least 25% of their total property, payroll, or gross receipts in Ohio, or;
  • Are domiciled in Ohio.