The Alliance Ohio income tax is a flat 2.0% municipal tax on earned income and business net profits, administered by the Regional Income Tax Agency (RITA). It applies to every Alliance resident regardless of where they work, and to non-residents on wages earned inside the city. Returns are due April 15, and every resident must file one even if nothing is owed.
Who Owes the Tax
If you live in Alliance, the 2.0% rate applies to all of your earned income, no matter which city or state you work in. If you work in Alliance but live elsewhere, the 2.0% applies to the wages you earn inside the city, and your employer typically withholds it directly from your paycheck.1Ohio Legislative Service Commission. Ohio Revised Code 718.04 – Authority for Tax on Income and Withholding Tax
Residents must file an annual return with the city whether or not tax is owed. The universal filing requirement lets Alliance confirm that your credits and exemptions actually zero out your liability. Non-residents whose employers correctly withheld the full 2.0% usually do not need to file separately.
Businesses operating in Alliance owe the 2.0% on net profits earned from activity in the city. A business operating in several municipalities apportions its profit, and only the Alliance share is taxed here.
Credit for Taxes Paid to Another City
This is the part that catches most Alliance residents who commute. Alliance gives you a credit for income tax paid to the city where you work, but the credit is capped at 1.75% of the wages earned there.2City of Alliance. Frequently Asked Questions Because Alliance’s own rate is 2.0%, the math leaves a gap:
- If the other city’s rate is 1.75% or higher, your credit stops at 1.75%, and you owe Alliance the remaining 0.25%.
- If the other city’s rate is less than 1.75%, you get full credit for what you paid there, and you owe Alliance the difference between that rate and 2.0%.
In practice, almost no Alliance resident working in another Ohio taxing city escapes owing something on the annual return.
What Income Is Taxable
Alliance taxes “qualifying wages” as Ohio law defines them. That covers your gross salary, commissions, bonuses, and other compensation. It also covers 401(k), 403(b), and 457 contributions that reduce your federal taxable wages: Ohio municipalities add those amounts back in for local tax purposes.3Ohio Legislative Service Commission. Ohio Revised Code 718.01 – Definitions
Self-employment net profit is taxable. So are lottery winnings, gambling winnings, sweepstakes prizes, and sports betting payouts, which Ohio law classifies as taxable municipal income.3Ohio Legislative Service Commission. Ohio Revised Code 718.01 – Definitions
What Income Is Exempt
The following are not subject to Alliance’s tax:
- Military pay and allowances for members of the U.S. armed forces, reserves, and National Guard.
- Retirement income, including Social Security, railroad retirement, pensions, and annuity or retirement plan distributions.
- Disability payments, whether from private insurance or any level of government.
- Intangible income such as interest, dividends, capital gains, and royalties from patents or copyrights.
- Unemployment compensation.
These exemptions are set by Ohio’s Revised Code and apply across all Ohio municipalities, not just Alliance.3Ohio Legislative Service Commission. Ohio Revised Code 718.01 – Definitions
Quarterly Estimated Payments
If you expect to owe at least $200 in Alliance tax for the year after withholding and credits, Ohio law requires you to pay quarterly estimates.4Ohio Legislative Service Commission. Ohio Revised Code 718.08 – Estimated Taxes This mainly affects self-employed people, business owners, and residents whose employers do not withhold Alliance tax. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027.
You need to have paid in 22.5% of your annual liability by the first deadline, 45% by the second, 67.5% by the third, and 90% by the fourth to avoid underpayment penalties.4Ohio Legislative Service Commission. Ohio Revised Code 718.08 – Estimated Taxes If your income is unpredictable, basing your estimates on last year’s actual liability is usually the safest route.
How to File With RITA
Alliance uses RITA for tax administration. Individual residents file RITA Form 37, which is available for download or electronic filing through RITA’s website.5Regional Income Tax Agency. Individuals – Form and Instructions Before you start, pull together:
- W-2 forms. Box 18 shows local wages, Box 19 shows local tax withheld, and Box 20 names the municipality. Confirm the municipality listed is where you actually worked.
- Form 1099-NEC or federal Schedule C for any self-employment or contractor income.
- Federal Schedule E if you have rental property income or loss.
The electronic filing system transfers data from your W-2s and federal schedules and calculates your Alliance liability. You can pay a balance due by ACH or credit card through the portal, or mail Form 37 with payment to RITA. The annual return is due April 15, 2026, matching the federal deadline.6Regional Income Tax Agency. Individuals – Filing Due Dates Keep copies of your return and supporting documents for at least three years.
Penalties and Interest for Late Payment
Missing the deadline or underpaying has real cost. RITA may impose a penalty of up to 15% of any tax not paid on time.7Regional Income Tax Agency. Penalty and Interest Rates Unpaid tax also accrues interest at a rate tied to the federal short-term rate plus five percentage points, rounded to the nearest whole percent.8Ohio Legislative Service Commission. Ohio Revised Code 718.27 – Interest Rate For 2026, Alliance has set that rate at 9% per year.9City of Alliance. Tax Resources Interest applies to unpaid tax, unpaid estimated payments, and unpaid withholding alike. Persistent non-compliance can lead to civil judgments through the local court system. Filing on time with even a partial payment limits the penalty exposure and is almost always better than not filing.
Business Net Operating Loss Carryforward
If your business or self-employment activity produces a net loss, you can carry it forward for up to five consecutive tax years to offset future profits. Starting with tax year 2023, the full unused loss is deductible against future municipal taxable income; the earlier 50% limitation has expired.3Ohio Legislative Service Commission. Ohio Revised Code 718.01 – Definitions Keep clear records, because RITA will want documentation if you claim the carryforward in a later year.