For tax years beginning in 2026, Ohio tax brackets collapse to a single rate: 2.75% on taxable income above $26,050, and nothing on income at or below that threshold.1Ohio Legislative Service Commission. Ohio Revised Code 5747.02 – Tax Rates If your taxable income crosses that line, the state tax is $332 plus 2.75% of every dollar over $26,050. That is the whole state schedule. One bracket, one rate.
The bill most Ohio residents actually pay is larger than that, because municipal income taxes and, in some places, a school district income tax sit on top of the state rate. Those are covered further down.
The 2026 Rate Schedule and What Changed
Ohio’s single-rate structure is new. In 2024, income above $100,000 was taxed at 3.5%. For 2025, that top rate dropped to 3.125%. Starting in 2026, the separate top tier disappears entirely, leaving the flat 2.75% on all taxable income over $26,050.2Ohio Department of Taxation. What’s New1Ohio Legislative Service Commission. Ohio Revised Code 5747.02 – Tax Rates
Watch the threshold. The move from $26,050 to $26,051 in taxable income triggers the full $332 base amount at once, not gradually. A single dollar of extra taxable income can push you from owing nothing to owing $332. That makes the exemptions and subtractions that reduce taxable income before the brackets apply worth understanding.
Personal Exemptions That Lower Taxable Income
Before the rate applies, Ohio subtracts a personal exemption for you, your spouse (on a joint return), and each dependent. The per-person amount depends on your modified adjusted gross income:
- Modified AGI of $40,000 or less: $2,350 per exemption
- $40,001 to $80,000: $2,100 per exemption
- Over $80,000: $1,850 per exemption
These amounts are subject to annual inflation adjustments, so figures for your tax year may be slightly higher. For 2026, exemptions phase out entirely once modified AGI reaches $500,000.3Ohio Legislative Service Commission. Ohio Revised Code 5747.025 – Personal Exemptions
A married couple filing jointly with two children and a modified AGI of $75,000 gets four exemptions at $2,100 each, or $8,400 subtracted from income before the rate applies. That reduction alone can be the difference between crossing the $26,050 taxable income threshold and staying under it.
What Ohio Counts as Taxable Income
Ohio starts with your federal adjusted gross income (line 11 of your federal 1040) and adjusts from there. Most income the IRS treats as taxable is also taxable in Ohio: wages, salaries, tips, interest, dividends, rental income, retirement distributions, self-employment earnings, and pass-through income.
Then come the additions and subtractions. The most common addition is interest earned on bonds issued by other states or their local governments, which the federal return excludes but Ohio taxes.4Ohio Department of Taxation. 2025 Ohio IT 1040 Individual Income Tax Return Common subtractions on the Ohio Schedule of Adjustments include:
- Taxable Social Security benefits included in federal AGI (Ohio does not tax them)5Ohio Department of Taxation. Senior Citizens and Ohio Income Tax
- Railroad retirement benefits, interest on Ohio state and local bonds, and certain military pay6Ohio Department of Taxation. Instructions for Filing Original and Amended 2025 Ohio IT 1040
- Business income deduction (see below)
- Uniformed services retirement income and active-duty military pay for members stationed outside Ohio
- Wages earned in Ohio by residents of reciprocal states
- State and local tax overpayments already reported on the federal return
- Ohio 529 plan contributions, up to $4,000 per beneficiary per year
- STABLE account (Ohio ABLE) contributions, up to $4,000 per beneficiary per year
Residency and Reciprocity
Full-year residents owe Ohio tax on all income, wherever earned. Part-year residents and nonresidents owe tax only on Ohio-source income, such as wages from an Ohio workplace or income from Ohio property.7Ohio Department of Taxation. Who Must File Taxes in Ohio
Ohio has reciprocity agreements with Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. Residents of those five states who earn only wage income in Ohio do not owe Ohio tax on those wages. If Ohio tax was withheld anyway, they file an Ohio return to get it refunded.7Ohio Department of Taxation. Who Must File Taxes in Ohio
Business Income Follows Its Own Rules
Pass-through income does not run through the standard bracket. If you receive income from a sole proprietorship, partnership, S corporation, or LLC, Ohio lets you deduct up to $250,000 of that income ($125,000 if married filing separately). Any qualifying business income above the cap is taxed at a flat 3%, not the 2.75% bracket rate.8Ohio Department of Taxation. Business Income Deduction Information
You calculate this on the Ohio Schedule of Business Income, attached to the IT 1040. A small business owner with $200,000 of pass-through income could owe no state tax on it after applying the deduction and exemptions.
Credits That Reduce the Tax You Owe
Credits come off the tax itself, not the income the bracket applies to.
Earned Income Tax Credit
Ohio’s earned income tax credit equals 30% of the federal credit and is nonrefundable, meaning it can zero out your Ohio tax but cannot generate a refund on its own.9Internal Revenue Service. States and Local Governments With Earned Income Tax Credit You must qualify for and claim the federal credit first.
Retirement Income and Senior Citizen Credits
If your modified AGI less exemptions is under $100,000, the retirement income credit ranges from $25 to $200 based on the amount of retirement income in your Ohio AGI. Taxpayers 65 or older can also claim an additional $50 senior citizen credit.10Ohio Department of Taxation. Retirement Income
Child and Dependent Care Credit
Taxpayers with modified AGI under $40,000 who claimed the federal child and dependent care credit on Form 2441 can also claim Ohio’s version.11Ohio Department of Taxation. Child Care and Dependent Care Credit The low income cutoff puts this out of reach for many middle-income families.
Joint Filing Credit
Married couples filing jointly can claim the joint filing credit if both spouses have at least $500 of qualifying income. Qualifying income generally means earned income and excludes investment income like dividends, capital gains, and rental income.12Ohio Department of Taxation. Joint Filing Credit
Municipal Income Tax on Top of the State Rate
Most Ohio cities and villages impose their own income tax, and the rates are not small. Municipal rates run from 0.5% to 3%, with many major cities between 2% and 2.5%.13Regional Income Tax Agency. Tax Rates Table For a lot of Ohio residents this local layer is larger than what they pay the state.
You owe municipal income tax to the city where you work. You may also owe it to the city where you live, though most home cities offer a residence credit for tax already paid to the workplace city. Live and work in the same place, and you only deal with one municipal return.14Regional Income Tax Agency. Municipal Income Tax Facts Live in one city and work in another, and whether you effectively pay twice depends on whether your home city gives a full or partial credit.
Municipal taxes are filed separately from the state return, often through the Regional Income Tax Agency (RITA) or the Central Collection Agency (CCA), depending on the city.
School District Income Tax
Some Ohio school districts add their own income tax, separate from state and municipal tax. Not every district has one. You can check yours using “The Finder” tool at tax.ohio.gov.
Two types exist. A traditional tax base uses modified AGI less exemptions, so retirement income is taxable. An earned income base covers only wages and self-employment income and leaves retirement income alone.15Ohio Department of Taxation. School District Income Tax The difference matters most to retirees. School district tax is filed on Form SD 100 alongside the IT 1040.
Filing, Deadlines, and Late Penalties
Ohio generally expects a return from anyone who lived in the state for any part of the year or had Ohio-source income (Ohio wages, lottery or casino winnings, income from Ohio property, or earnings from a business operating in Ohio). Filing is not required if your Ohio AGI is zero or less, or if credits cover your tax and you owe no school district tax. Even so, the Department of Taxation recommends filing when federal AGI exceeds $28,450 to avoid automated delinquency notices.7Ohio Department of Taxation. Who Must File Taxes in Ohio
The deadline is April 15. A federal extension automatically gives you six additional months to file in Ohio; no separate state form is needed. The extension covers filing only. Payment is still due April 15.
Late filing carries a flat $50-per-month penalty, capped at $500, and it applies even if the return shows a refund. Unpaid tax accrues interest at 3%, and the late payment penalty runs at double the interest rate. Because the extension does not extend the payment date, filing on time without paying still avoids the late-filing penalty but not the interest and payment penalty on the balance.