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Tax Climate

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Ohio Tax and Incentive Resources

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Ohio Sales Manager - Matt McQuade
(614) 857-0900 ext. 231

Making a commitment to eliminate a burdensome tax system, Ohio in 2005 implemented full-scale, sweeping tax reform.

Ohio's new business taxation model will mean a reduction in tax burden of up to 63 percent by 2010, the first year reform is fully implemented.

Ohio's new taxation system means businesses can:

  • Reduce operating costs – No tax on inventory or corporate income
  • Enhance productivity – No tax on investments in machinery and equipment
  • Enjoy a level playing field – All companies taxed the same low rate
  • Boost return on investment – No tax on product sold to customers outside Ohio
  • Reward entrepreneurship – First $1 million in gross receipts are tax-free; companies with sales between $150,000 and $1 million pay only a $150 flat fee

For details on Ohio's tax reform download the following documents:

Ohio's Tax Environment*

Tax Rate Additional Information
Commercial Activities Tax (CAT) A tax imposed on the privilege of doing business in Ohio. The CAT is measured by Ohio gross receipts and paid by business located both in and outside of Ohio, that operate in Ohio.

The CAT is paid by any business with Ohio gross receipts of $150,000 or more in a calendar year. Businesses with annual Ohio gross receipts of $150,000 or less are not subject to the CAT. Annual Ohio gross receipts from $150,001-$1 million are subject to a minimum $150 tax.

For Ohio gross receipts exceeding $1 million the rate is .26%. Out-of-state gross receipts are exempt.		 Replacement for the Ohio Corporate Franchise and tangible personal property taxes.
Corporate Franchise Tax Eliminated Former rate was 5.1% on a company's first $150,000 of net income and 8.5% on net income thereafter.

Before being fully eliminated beginning on January 1, 2010, the 2009 rate will be 20% of the former, full rate (pre-2005).
Tangible Personal Property Tax Eliminated Formerly a tax on machinery and equipment, furniture and fixtures, and inventory. The tangible personal property tax was eliminated with the 2005 tax reform.

When levied, a millage (dollars per thousand), which varied depending on the local school district in which the property is located, was applied to the personal property's assessed value (25% of actual value).
Real Property Tax Real property, or real estate, which includes land and improvements to land (buildings, etc.) is subject to property tax in Ohio. The taxable value of real estate is 35 percent of market value. The effective tax rate applied to the assessed value varies by school district.

The average effective tax rate for real property in 2006 in Ohio was 63 mills.		 Real Property Tax Formula:

(Actual value) x (.35) = Assessed value

(Assessed value) x (local millage) = Real property tax
Personal Income Tax
(for 2008, 2009 and 2010)
Ohio Taxable Income Tax Calculation
$0 - $5,000 0.618% of Ohio taxable income
$5,001 - $10,000 $30.90 + 1.236% of excess of $5,000
$10,001 - $15,000 $92.70 + 2.473% of excess over $10,000
$15,001 - $20,000 $216.35 + 3.091% of excess over $15,000
$20,001 - $40,000 $370.90 + 3.708% of excess over $20,000
$40,001 - $80,000 $1,112.50 + 4.327% of excess over $40,000
$80,001 - $100,000 $2,843.30 + 4.945% of excess over $80,000
$100,001 - $200,000 $3,832.30 + 5.741% of excess over $100,000
$200,001 - over $9,573.30 + 6.24% of excess over $200,000
Reforms enacted in 2005 called for a gradual 21 percent across the board reduction in income tax rates. Tax rates have been reduced four times, and are now 16.8 percent lower than they were five years ago. A fifth rate cut is scheduled for 2011.
Sales & Use Tax Applies to the retail sale, lease, and rental of tangible personal property, as well as the sale of selected services. The state sales and use tax rate is 5.5%.

Counties and regional transit authorities may levy additional local sales and use taxes.		 County rates range from an additional 1% - 2.0%
Unemployment Insurance Employers must make contributions on the first $9,000 of each covered employee's wages. The contribution rate is 2.7%.
Worker's Compensation Ohio worker's compensation rates are calculated by the Ohio Bureau of Worker's Compensation (BWC).

The Ohio BWC classifies industries according to the National Council of Compensation Insurance. Each separate industry classification has its own basic premium rate.

The cost of claims in each industry classification determines rates. Base rates are calculated by estimating the cost of claims expected to occur in the next year using costs of past accidents and diseases in each industrial classification.

An employer's accident experience, fluctuations in payroll, medical costs, and worker's compensation benefit levels are primary factors in premium rates.		 For more information or a quote, contact the Ohio Bureau of Worker's Compensation Customer Service Center at (800) OHIO-BWC
Real Estate Transfer (Conveyance) Tax Tax on the transfer of property. The state rate is 1 mill applied to the property's face value.

The county may levy up to 3 additional mills.

*Ohio Business Tax Guide 2008. For additional information, visit the Ohio Business Tax Guide 2008.