City of Vandalia Income Tax: Rates, Credits, and NOL Carryforward

Vandalia, Ohio charges a flat 2.0% municipal income tax on wages, self-employment earnings, and business net profits, and every resident age 18 or older has to file an annual return by April 15 even if nothing is owed. The Vandalia Ohio income tax applies to residents on all their earned income and to nonresidents on what they earn inside city limits. Chapter 884 of the Vandalia Codified Ordinances sets the rules, and the city’s Income Tax Division administers them.¹

What Income the 2.0% Rate Covers

The 2.0% rate is the same for residents and nonresidents. For individuals, it hits qualifying wages, salaries, commissions, and net profits from business activity or self-employment. Gambling and lottery winnings are also taxable under Ohio’s municipal income tax framework.¹²

Businesses pay the same 2.0% on net profits earned in the city, whether they file as a sole proprietorship, partnership, or corporation.¹

Several income types are not taxed. Interest, dividends, and royalties are exempt from Ohio municipal income taxation.³ Social Security benefits, pension income, and military pay earned on active duty are also generally excluded. The tax reaches earned income and business profit, not investment returns or retirement checks.

Who Has to File

Every Vandalia resident 18 or older must file an annual return. That obligation stands even if you earned nothing, owe nothing, or had Vandalia tax withheld from every paycheck. The city uses the return to confirm withholding matched actual liability.⁴

Nonresidents who work in Vandalia are treated differently. If your employer fully withheld Vandalia tax on your wages, you generally do not need to file a separate return. If withholding did not cover all of your Vandalia-source income, you have to file for the portion earned in the city.⁵

Businesses operating or maintaining a presence in Vandalia must file annual net profit returns whether or not any additional tax remains due after withholding or estimated payments.

Credit for Tax Paid to Another Ohio City

This is where Vandalia residents who commute across city lines can get their bill wrong. Ohio law lets a home city give its residents a credit for income tax paid to the city where they work, capped at the home city’s own rate.⁶ Vandalia grants that credit under Section 884.081, up to its 2.0% rate.

A Vandalia resident who works in Dayton, which taxes at 2.5%, gets a Vandalia credit of up to 2.0% on those wages, which zeroes out the Vandalia obligation on that income. A resident who works in a city taxing at 1.5% still owes Vandalia the 0.5% difference. Watch the work-city rate on your return. This is the most common source of overpayment and refund requests in Ohio municipal filing.

Filing Deadline and Extensions

The annual return is due by April 15 after the tax year ends. Businesses on a fiscal year get three and a half months after their fiscal year closes. The date shifts when April 15 lands on a weekend or federal holiday.⁵

You can request an extension that generally follows the federal extension period. An extension to file is not an extension to pay. You still have to estimate and pay your tax by April 15 to avoid penalties and interest, even if the return itself comes in later.

Quarterly Estimated Payments

If you expect to owe Vandalia at least $200 for the year after withholding and credits, you have to make quarterly estimated payments. This mostly affects self-employed residents, business owners, and people with sizable income that isn’t subject to employer withholding.⁷

For calendar-year individuals, each 2026 due date is a cumulative target, not a flat quarter:

April 15, 2026 — at least 22.5% of the year’s liability
June 15, 2026 — at least 45%
September 15, 2026 — at least 67.5%
January 15, 2027 — at least 90%

Falling short at any point triggers a 15% underpayment penalty on the amount not timely paid, plus interest at 9% per year for 2026.⁸⁷

How to File and What to Send

Pull these documents before you start:

All W-2 forms showing wages and any municipal tax withheld
Any 1099-NEC or 1099-MISC for freelance, contract, or other non-wage income
The first page of your federal Form 1040, plus Schedule 1 if you filed one

These federal documents have to be enclosed with every annual return, amended return, or refund request filed with the city.⁵

Vandalia’s Income Tax Division posts forms and instructions on the city website.⁹ You can also file electronically through the CCA eFile portal, which handles returns for many Ohio municipalities.¹⁰

Paper returns go to CCA Division of Taxation, PO Box 94810, Cleveland, OH 44101-4810. Returns requesting a refund use a different address: PO Box 94520, Cleveland, OH 44101-4520.¹¹ Put your taxpayer identification number on all correspondence and checks.

Penalties and Interest for Late Filing or Payment

Vandalia charges separate penalties for late filing and late payment, and they can stack.

Late filing costs $25 per return. Ohio law requires the city to waive this penalty the first time a taxpayer files late, as long as the return eventually gets in.¹²

Unpaid tax carries a 15% penalty on the amount not timely paid, applied to regular balances and unpaid estimated tax alike.⁸¹²

Interest starts running on the original due date, not the date you file. If you file in August without having paid in April, you owe interest for the whole gap on top of the 15%. That is why paying by April 15 matters even when you take an extension.

Net Operating Loss Carryforward for Businesses

Business filers who lose money can carry that net operating loss forward against future Vandalia taxable income. For losses in tax years beginning on or after January 1, 2017, a business may carry the unused loss forward for up to five consecutive tax years, or until the loss is fully used, whichever comes first.¹³

The carryforward uses the pre-apportioned loss amount, so a business operating in multiple cities applies the loss before dividing income across jurisdictions. Losses only move forward; they cannot be carried back for refunds. Track each year’s loss and how much remains, because unused amounts expire when the five-year window closes.

1
American Legal Publishing. Vandalia Codified Ordinances – Section 884.012 Purposes of Tax; Rate
2
Ohio Legislative Service Commission. Ohio Revised Code Section 718.01
3
CCA – Division Of Taxation. Municipal Income Tax Individual Instruction Booklet
4
American Legal Publishing. Vandalia Codified Ordinances – Section 884.091 Return and Payment of Tax
5
City of Vandalia. General Information for Individuals Tax Year 2025
6
Ohio Legislative Service Commission. Ohio Revised Code Chapter 718 – Section 718.04
7
American Legal Publishing. Vandalia Codified Ordinances – Section 884.07 Declaration of Estimated Tax
8
Vandalia, OH. Penalty and Interest Rates
9
Vandalia, OH. Income Tax Division
10
CCA – Division Of Taxation. CCA eFile
11
CCA – Division Of Taxation. Where to File
12
Ohio Legislative Service Commission. Ohio Revised Code Chapter 718 – Section 718.27
13
City of Vandalia, Ohio. 2025 Business Return Instructions