Payroll tax in Ohio: What employers need to know [2023]

Whether you’re starting a small business in Ohio or running a global company with Ohio employees, you need to stay on top of your tax obligations. But navigating the tangled web of federal, state, and local requirements can get tricky.

In addition to the Medicare taxes and social security taxes that all US employers have to pay, you also have to account for Ohio’s income tax and state-run unemployment fund. To zoom in even more locally, hundreds of Ohio municipalities also impose school district income taxes that employers need to withhold from paychecks.

So if you want to keep track of all of Ohio’s payroll tax requirements, read our guide below. 

Ohio's payroll taxes

The Ohio Department of Taxation administers the state's payroll taxes. Employers are required to withhold taxes from paychecks for any Ohio resident employees or nonresident employees working within state boundaries. Per state law, be sure to use the Ohio New Hire Reporting Portal to report a new employee within 20 days of their hiring date, which ensures they’re accounted for during payroll tax withholdings. 

Ohio has a progressive state income tax in addition to other state and local requirements. Learn more about Ohio's payroll taxes below.

Unemployment insurance tax

Ohio has a State Unemployment Insurance (SUI) program that offers temporary payments to employees who lost their jobs for reasons outside of their control. Employers are required to provide information to the Ohio Department of Job and Family Services to determine whether they should make SUI contributions.

Ohio employers are liable to contribute to SUI if they:

• Employed at least one worker during 20 different weeks in a calendar year (or preceding year)
• Paid $1,500 or more to employees in any quarter in the last year (this number is $1,000 for domestic service workers or $20,000 for agricultural workers)
• Are a nonprofit exempt from federal income tax but employed at least five workers during 20 different weeks in a calendar year

Visit the Ohio Department of Job & Family Services website for more information on Ohio’s SUI. Also keep in mind that this state-run unemployment fund is separate from federal unemployment taxes, which employers also have to withhold at a rate of 6% of the first $7,000 of an employee's wages. However, according to the IRS, may be eligible for a 5.4% tax credit on federal unemployment contributions.

State income tax

The state of Ohio has a personal income tax that rises at a progressive rate according to income. The rates across different tax brackets are listed in the table below.

Nonresidents who work in Ohio are subject to this income tax, which employers are required to withhold from employee paychecks. But if your employee lives in Indiana, Michigan, Kentucky, Pennsylvania, or West Virginia, you don’t need to file the state income tax because of reciprocity provisions. 

School district income tax

Some Ohio municipalities levy taxes to fund public school districts. If your employee lives in one of these areas, you have to withhold their school district tax as part of your tax return. To see if you’re liable to pay this tax, you can search addresses online. You can also look at the Department of Taxation’s 2024 withholding tables to view all school district income tax rates but keep in mind that they’re subject to change every year. 

The school districts that service Columbus, Cleveland, and Cincinnati do not currently have an associated tax. Of the districts that do, rates range between 0.25% and 2%. 

Sifting through Ohio’s payroll tax regulations can get complicated, especially when trying to keep track of local income taxes across 611 different school districts. But Rippling’s payroll compliance software is here to help. 

Rippling automatically calculates your taxes and submits your tax forms and employer income tax withholdings on your behalf. The system handles taxes at the federal Ohio state and local levels to monitor compliance and prevent infractions. What’s more, Rippling's PEO can register and maintain your state tax accounts for you, automating even more of the payroll tax process.

Payroll tax due dates in Ohio

The Ohio Department of Taxation assigns different schedules for due dates for employers to submit their employer and school district withholdings, depending on how much they’re paying. The table below lists the withholding amount ranges along with how often employers have to pay taxes and when those taxes are due.

Employers also need to file annual reconciliation forms and W-2s by January 31. Late filings can incur penalties of either $50 or 5% per month. 

How to submit payroll taxes in Ohio

Once you know which payroll taxes employers are on the hook for and when those taxes are due, the next step is paying them. Before filing, determine your local school district income tax requirements by searching your address and finding your pay rate. You can also fill out School District Income Tax Return forms on the Ohio Department of Taxation website. You also need to gather an Ohio Employee Withholding Exemption Certificate (Form IT 4) from all of your Ohio employees (or all employees if you’re based in Ohio) to see if they can claim exemptions, allowing you to withhold the correct amount from their taxable income. Make sure to save these forms in case the Department of Taxation asks for them. 

From there, you can file and pay your payroll taxes. As of 2015, Ohio requires employers to submit e-filings. According to the Department of Taxation, the preferred method is through Ohio Business Gateway, where you can make an account, pay taxes, and track your filing status. You can also submit an Electronic Funds Transfer (EFT) payment via the Ohio Treasurer of State. 

Rippling’s full-service payroll software

If you’re looking for the easiest stay on top of Ohio’s tax requirements, Rippling’s payroll software can automatically calculate and file federal, state, and local taxes while managing compliance. 

FAQs about Ohio payroll taxes

Are there local tax laws in Ohio?

Yes. In addition to state income taxes, many, but not all, Ohio municipalities levy a local tax to help fund their school districts (known as a school district income tax). Many of Ohio’s municipalities also impose additional local income taxes where Ohioans live and work, which individual taxpayers need to pay as part of a local tax return (in addition to their state and federal responsibilities). 

Can your tax returns be audited in Ohio?

Yes. The Ohio Department of Job & Family Services is required to randomly audit a percentage of employers annually to ensure compliance with unemployment tax laws. An audit can also be triggered if a former employee files a faulty unemployment claim or if you report a discrepancy in wages between federal and state returns. A normal audit covers one calendar year. In Ohio, it can cover up to four years. 

What is RITA?

In addition to school district and state income taxes, about half of Ohio’s 2,000 municipalities impose a separate local income tax. While employers don’t withhold this as a part of their payroll taxes, individual taxpayers have to file them as in addition to federal and state returns. The Regional Income Tax Agency (RITA) is a third-party agency that administers these municipal taxes on behalf of hundreds of Ohio cities and villages. You can see the tax rate schedules on RITA’s website. RITA helps taxpayers in its municipalities determine whether they can get tax credits to lower tax burdens where they live or work. RITA is an administrative agency; contrary to popular belief, there’s no such thing as a “RITA tax.”

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for, tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.