Dayton, Ohio tax rates stack across four jurisdictions: the city charges a 2.5% municipal income tax on earned income, Ohio adds a 2.75% flat state income tax on nonbusiness income above $26,050, retail purchases carry a combined 7.50% sales tax, and property owners pay mill-based taxes calculated on 35% of their home’s fair market value. Each rate is triggered differently, and the credits and exemptions tied to them can meaningfully change what you actually owe.
City Income Tax: 2.5%
The City of Dayton taxes earned income at 2.5%. The rate combines a 2.25% base from Ordinance 31288-14 with an additional 0.25% from Ordinance 32072-23, which took effect January 1, 2025.1City of Dayton. Tax Information and Forms It applies to wages, salaries, commissions, and net profits from a business or profession. Interest, dividends, and other investment income are not covered.
Both residents and non-residents owe the tax. If you live in Dayton, your earned income is taxable no matter where you earn it. If you live outside the city but work inside it, the 2.5% applies to the income you earn there.2Ohio Legislative Service Commission. Ohio Revised Code 718 – Municipal Income Taxes Businesses operating in Dayton pay the same 2.5% on net profits.1City of Dayton. Tax Information and Forms
Credit for Taxes Paid to Other Cities
Dayton residents who work in another Ohio municipality and pay that city’s income tax get a dollar-for-dollar credit against their Dayton bill, up to the full 2.5%.3CCA – Division Of Taxation. Dayton Work in a city with a 2% rate and you owe Dayton the 0.5% difference. Work in a city at 2.5% or higher and you owe Dayton nothing extra. The credit is authorized by Ohio Revised Code Chapter 718.4Ohio Legislative Service Commission. Ohio Revised Code 718.04 – Authority for Tax on Income and Withholding Tax
Penalties for Late Payment
Tax that isn’t paid on time carries a 15% penalty on the unpaid amount. Interest accrues at 9.0% annually for 2026, calculated as the federal short-term rate rounded to the nearest whole percent plus five points.5City of Dayton. Penalty and Interest Rates The same structure applies to missed estimated payments.
Ohio State Income Tax: 2.75%
For taxable years beginning in 2026, Ohio imposes a flat 2.75% tax on nonbusiness income above $26,050. Income below that threshold owes nothing at the state level.6Tax Foundation. State Individual Income Tax Rates and Brackets, 2026
Dayton residents catch a break at another layer. The Dayton City School District does not currently levy a school district income tax, which is unusual in Ohio. Many other districts in the state charge between 0.5% and 2% on top of state and municipal rates.
Sales Tax: 7.50%
Retail purchases in Dayton carry a combined 7.50% sales tax. That total is Ohio’s 5.75% statewide base, a 1.25% Montgomery County levy, and a 0.50% transit authority tax.7Ohio Department of Taxation. State and Permissive Sales Tax Rates, by County The rate applies to tangible goods and certain services whether bought in a store or through an online marketplace.
Groceries intended for off-premises consumption and prescription medications are exempt under Ohio law.8Ohio Department of Taxation. Sales and Use Tax Information Release ST 2004-01 – Sales and Use Tax Exemption for Certain Food and Medicine Prepared food eaten on-site is taxable, as are clothing, electronics, furniture, and most other retail goods.
Property Tax
Property taxes are expressed in mills, with one mill equal to one dollar of tax per $1,000 of assessed value. Ohio law sets assessed value at 35% of a property’s fair market value.9Montgomery County, Ohio. Frequently Asked Questions A home with a $200,000 market value has a $70,000 assessed value. Multiply that by your district’s total mill rate and divide by 1,000 to get the annual bill.
Effective mill rates vary by school district, library district, and service district, so two homes with the same market value on opposite sides of town can owe different amounts. Property tax revenue funds Dayton Public Schools, county infrastructure, library systems, and emergency services.
Payment Deadlines
Montgomery County collects property taxes in two installments. For 2026, the first-half payment is due February 13 and the second-half payment is due July 17.10Montgomery County, Ohio. Frequently Asked Questions Late payments carry penalty and interest charges on the delinquent balance.
Homestead Exemption
Senior citizens, permanently disabled individuals, and surviving spouses of public service officers killed in the line of duty may qualify for the Homestead Exemption.11Montgomery County, OH. Homestead It removes up to $25,000 of market value from the tax calculation.12Ohio Department of Taxation. Homestead Exemption Application for Senior Citizens, Disabled Persons and Surviving Spouses At the 35% assessment ratio, that works out to $8,750 off assessed value, which saves a few hundred dollars a year depending on your mill rate.
Challenging Your Valuation
If you believe the county auditor’s appraisal overstates your home’s fair market value, you can file a complaint with the Montgomery County Board of Revision between January 1 and March 31. You’ll need to state your proposed value and support it with evidence such as recent comparable sales or an independent appraisal. Evidence must be submitted to the BOR portal at least 10 days before the hearing, and the Board issues its decision by mail within 90 days.13Montgomery County, OH. BOR Process
Lodging Tax: 3%
Guests at Dayton hotels and motels with five or more rooms pay a 3% lodging tax on top of the nightly rate. Montgomery County administers it, and the revenue funds the Dayton/Montgomery County Convention and Visitors Bureau and local cultural facilities.14Montgomery County, OH. Hotel/Motel Tax Administration Short-term rental hosts should know that residential rental properties must be registered with the Montgomery County Auditor; failure to register is a minor misdemeanor carrying a fine of up to $150.15Montgomery County, OH. Rental Registration
Filing and Estimated Payments
The Dayton annual return is due on the same date as the Ohio individual income tax return, which for calendar-year filers is April 15.16Ohio Legislative Service Commission. Ohio Revised Code 718.05 – Annual Return Filing A six-month federal extension automatically extends the Dayton deadline to October 15, but the extension only covers paperwork. Any tax owed is still due April 15.
If you expect to owe at least $200 in Dayton tax after withholding and credits, you must file a declaration of estimated tax and pay quarterly.17Ohio Legislative Service Commission. Ohio Revised Code 718.08 This typically catches self-employed workers, freelancers, and landlords whose employers don’t withhold Dayton tax. For individuals, the cumulative targets are:
- April 15: at least 22.5% of annual liability
- June 15: at least 45% cumulative
- September 15: at least 67.5% cumulative
- January 15 of the following year: at least 90% cumulative
Missing a quarterly payment and catching up later still triggers the 15% penalty on the late portion plus 9.0% annual interest for 2026.5City of Dayton. Penalty and Interest Rates Returns can be filed electronically through the Central Collection Agency portal, which administers Dayton’s tax, or on paper forms downloaded from the city’s tax forms page.18City of Dayton. Tax Forms