Ohio does not charge sales tax on most services. The state treats services as exempt by default, and a service becomes taxable only if the legislature has specifically listed it in the Ohio Revised Code. The statewide rate is 5.75%, and combined state and county rates run from 6.50% to 8.25% depending on where the sale happens.1Ohio Department of Taxation. Sales and Use Tax So the practical question is not whether your service is exempt, but whether it appears on the taxable list.
Why Services Start Out Exempt
Ohio treats goods and services as opposites for sales tax purposes. Physical goods are presumed taxable unless an exemption applies. Services work the other way: presumed exempt unless the legislature has specifically named them as taxable.2Ohio Legislative Service Commission. Ohio Code 5739.01 – Sales Tax Definitions
That means common professional services go untaxed. Legal advice, medical care, accounting, engineering, consulting, and advertising all sit outside Ohio’s sales tax reach. If you provide a service and want to know whether to collect tax, the burden is on the state to point to a specific statutory provision. No listing, no tax.
The Services Ohio Does Tax
R.C. 5739.01(B)(3) contains the complete list of services subject to Ohio sales tax. If your business provides any of the following, you are required to collect and remit:2Ohio Legislative Service Commission. Ohio Code 5739.01 – Sales Tax Definitions
- Repair or installation of tangible personal property (vehicles, appliances, machinery, equipment)
- Motor vehicle detailing: washing, cleaning, waxing, polishing, or painting
- Laundry and dry cleaning
- Automatic data processing, computer services, and electronic information services, when sold for business use
- Telecommunications, including phone plans, prepaid calling, and ancillary services (coin-operated phones are excluded)
- Landscaping and lawn care: mowing, planting, trimming, mulching, and fertilizing
- Snow removal by mechanized means
- Private investigation and security services
- Building maintenance and janitorial services, including commercial cleaning, floor care, and window washing
- Exterminating services
- Physical fitness facility services, such as gym memberships
- Recreation and sports club services
- Satellite broadcasting services
- Personal care services: haircuts, manicures, pedicures, tanning, tattoos, body piercings, massage, skin care, and cosmetic application (services ordered by a licensed physician are excluded)
If your service is not on that list, Ohio sales tax does not apply to it. That is the entire test.
Services With Thresholds or Conditions
A few of the taxable categories come with conditions that change whether tax is owed in a given situation.
Landscaping and snow removal small-provider exception. Each of these is exempt if your gross sales for that specific service stay below $5,000 in a calendar year. Once you reach $5,000 in either category during the year, you must register as a vendor and collect tax on all future sales of that service. The two categories are tracked separately, so $3,000 in lawn care and $4,000 in snow removal would not trigger the obligation for either one.3Ohio Department of Taxation. Landscaping, Lawn Care, and Snow Removal
Computer and electronic information services: business use only. Data processing, computer services, and electronic information services are taxable only when the buyer is a business using them for business operations. Individual consumers buying the same services for personal use owe no sales tax.4Cornell Law Institute. Ohio Admin Code 5703-9-46 – Sales and Use Taxes: Automatic Data Processing, Computer Services, and Electronic Information Services
A “true object” test also applies. If the real purpose of the transaction is professional advice or consulting, and the data processing is only incidental to that advice, the transaction is not taxable. The question for a technology consultant delivering a report is whether the client is paying for expertise or for the data output itself.2Ohio Legislative Service Commission. Ohio Code 5739.01 – Sales Tax Definitions Transactions between affiliated companies are carved out entirely: if one business owns more than 50% of another’s voting stock, data processing and computer services exchanged between them are not considered sales.
Digital Products Are Taxed Separately
Since January 1, 2014, Ohio has taxed “specified digital products” under a different statutory provision from the enumerated services list. Movies, music, e-books, and streaming subscriptions such as Netflix and Hulu are taxable, and so is prewritten software whether downloaded or sold on a disc. The tax applies whether you buy permanent access or rent temporary access, and satellite-delivered digital products are taxable even when the satellite charge appears as a separate line on the bill.5Ohio Department of Taxation. Sales and Use Tax – Digital Products
Not everything delivered digitally is swept in. Electronically delivered photographs, magazines, and newspapers are specifically excluded, and digital products delivered through cable television systems are exempt.5Ohio Department of Taxation. Sales and Use Tax – Digital Products
Repair Labor: Personal Property vs. Real Property
Whether labor is taxable often depends on what is being worked on. Repairs or installation involving tangible personal property, including vehicles, machinery, appliances, and equipment, are taxable. A mechanic collects tax on the labor portion of an engine repair, and a technician installing new equipment in a factory collects tax on the installation labor.2Ohio Legislative Service Commission. Ohio Code 5739.01 – Sales Tax Definitions
Real property improvements work differently. When a contractor installs a new roof, builds an addition, or replaces plumbing, the contractor is generally treated as the end consumer of the materials. The contractor pays sales tax when buying the materials, and the labor charged to the property owner is not separately taxed as a service.6Cornell Law Institute. Ohio Admin Code 5703-9-14 – Sales and Use Tax; Construction Contracts; Exemption Certificates
The line between personal and real property is not always obvious. A “business fixture,” meaning something permanently attached to a building but primarily benefiting the business rather than the building itself, is treated as personal property. Specialized foundations for machinery count as business fixtures. Standard building systems such as HVAC that primarily serve occupant comfort are part of the real property.7Ohio Legislative Service Commission. Ohio Code 5701.03 – Personal Property and Business Fixture Defined
Invoices That Mix Taxable and Non-Taxable Items
When one invoice combines taxable and non-taxable items at a single lump-sum price, Ohio’s bundled transaction rule applies. The question is the “true object” of the purchase. If the customer is really after the taxable item, the whole bundled price is taxable. If the true object is something non-taxable, the whole transaction escapes tax.8Ohio Department of Taxation. Sales and Use Tax: Bundled Transactions
There is a safe harbor. If the taxable portion accounts for 10% or less of the total price, it is considered de minimis and the entire transaction is treated as non-taxable. For telecommunications bundles specifically, the rules tighten: if you cannot separately identify the non-taxable portion from your regular business records, the entire price is taxable at the highest applicable rate.8Ohio Department of Taxation. Sales and Use Tax: Bundled Transactions Itemizing invoices avoids the issue; when taxable and non-taxable components appear as separate line items with separate prices, each is evaluated on its own.
If Your Service Is Taxable
Before collecting sales tax on any taxable service, you need a vendor’s license from the Ohio Department of Taxation. As of April 2025, the fee for a new county vendor’s license is $50, increased from $25 under HB 366. Transient vendor’s licenses carry the same $50 fee.9Ohio Department of Taxation. Vendors License Fee Change Coming Soon Applications go through the Ohio Business Gateway using Form ST 1.10Ohio.gov. Vendors Licenses
Returns are filed on the UST 1 through the same Gateway, with filing frequency set by how much tax you collect: monthly for most vendors (due the 23rd of the following month), quarterly if your quarterly liability is under $15,000, or semi-annual if liability is below $1,200 per six-month period. Businesses with annual tax liability over $75,000 must pay electronically.1Ohio Department of Taxation. Sales and Use Tax Keep sales tax records for at least four years from the later of the filing date or the return’s due date.11Cornell Law Institute. Ohio Admin Code 5703-29-18 – Records Retention Requirements
Out-of-state sellers are not off the hook. A business with no Ohio location must register for a seller’s use tax account if, in the current or prior calendar year, it made more than $100,000 in total sales to Ohio customers or completed 200 or more separate transactions with Ohio buyers. The same thresholds apply to marketplace facilitators, which become responsible for collecting and remitting on sales made through their platforms.1Ohio Department of Taxation. Sales and Use Tax
One warning worth taking seriously. Under R.C. 5739.33, any officer, member, manager, trustee, or employee who had control over tax filings and payments can be held personally liable when a business fails to remit sales tax. Dissolving the business, filing for bankruptcy, or shutting down operations does not wipe out that personal liability, and when more than one person qualifies as a responsible party, the liability is joint and several.12Ohio Legislative Service Commission. Ohio Code 5739.33 – Personal Liability for Tax If you are a corporate officer or LLC member, confirming that sales tax returns are filed and paid on time is a personal obligation, not only a business one.