At a glance
- Corporate tax
- None — CAT 0.26% above $6M
- Tax on wages
- 2.75% flat over $26,050
- Sales tax
- 5.75% + county
- Economic nexus
- $100,000 or 200 transactions
- Minimum wage
- $11.00/hr
- UI wage base
- $9,000
- New-employer UI rate
- 2.7% + 0.15% fee
- Paid leave program
- None
- Annual report
- None for corporations
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
License the corporation
Before hiring or opening an office in OhioFile for a license to transact business as a foreign corporation with the Ohio Secretary of State ($99).
Register for state and school district withholding
Before the first Ohio payrollRegister for Ohio employer withholding on OH|TAX eServices, and for school district withholding (Form IT 1R) if any employee lives in a taxing school district.
Register with the city
Before the first Ohio payrollRegister with the city where each employee works (or its administrator, such as RITA) for municipal withholding, and for its net profit tax.
Open an unemployment account
When you first pay Ohio wagesOpen an ODJFS unemployment account. New employers pay 2.7% on the first $9,000, plus the 0.15% fee in 2026–2027.
Get BWC coverage
Before the first employee startsBuy coverage from the Ohio Bureau of Workers’ Compensation; private policies don’t cover Ohio employees.
Report new hires
Within 20 days of hireReport each new hire to the Ohio New Hire Reporting Center.
Register for sales tax
When nexus startsRegister for sales tax once you pass $100,000 of Ohio sales or 200 transactions, or immediately if you have an Ohio office and sell taxable services such as business-use SaaS.
The six areas
- AccountingAccounting and state tax in OhioOhio has no corporate income tax; its 0.26% Commercial Activity Tax excludes the first $6 million of Ohio receipts, so the business tax a startup actually meets is its city’s net profit tax.Corporate income taxNone
- ReceivablesReceivables and sales tax in OhioOhio taxes SaaS used in business at 5.75% plus local rates, and the 200-transaction test still counts toward nexus.State sales tax rate5.75%
- PayablesPayables and contractors in OhioOhio taxes the business software you buy, so untaxed SaaS invoices carry use tax; 1099s go to Ohio only when they report Ohio withholding.W-2/1099 uploadDue Jan 31
- PayrollPayroll taxes and employer rules in OhioOhio payroll carries state, city and school district income taxes, UI on the first $9,000 plus a 0.15% fee for 2026, and no state paid leave program.State income tax (2026)2.75% flat
- ComplianceCompliance and filings in OhioOhio has no annual report and no franchise tax; compliance is a $99 foreign license, BWC coverage from the state fund, local tax registrations and a November 1 unclaimed funds report.Foreign corporation license$99
- AdvisoryAdvisory: credits and decisions in OhioOhio’s 7% R&D credit offsets only the CAT, which most startups no longer owe; the advice that matters is about cities, remote hires and the state-run workers’ comp fund.R&D investment tax credit7% of the increase
Who you register with
- Ohio Department of TaxationCommercial Activity Tax, employer and school district withholding, sales and use tax, via OH|TAX eServices
- Ohio Department of Job and Family Services (ODJFS)Unemployment insurance account and quarterly contribution reports
- Ohio Secretary of StateForeign corporation license to transact business
- Ohio Bureau of Workers’ Compensation (BWC)Workers’ compensation coverage — Ohio’s state fund is the only insurer for most private employers
- Regional Income Tax Agency (RITA)Municipal income tax withholding and net profit returns for its member cities
- Ohio Division of Unclaimed FundsAnnual unclaimed funds report, including the “NONE” report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Ohio’s neighbors.
- INIndianaLow flat rates and no tax on SaaS, but a county income tax on every paycheck
- KYKentuckySimple state rates, local occupational taxes on wages and profits, and SaaS is taxed.
- MIMichigan6% CIT that still amortizes R&D, a refundable R&D credit and 24 city income taxes
- PAPennsylvaniaFlat 3.07% state tax, local wage taxes nearly everywhere, and taxable SaaS
- WVWest VirginiaFalling income tax, a 14-day new-hire rule that covers contractors, and taxed services
Common questions
Does Ohio tax our profits?
Not at the state level. Ohio has no corporate income tax; it has the Commercial Activity Tax, a 0.26% tax on gross receipts sitused to Ohio. Since 2025 the first $6 million of Ohio taxable gross receipts each year is excluded, so a startup below that line owes nothing and need not keep a CAT account. What a C-corp can still owe in Ohio is municipal net profit tax to the cities where it has an office or employees.
Is our SaaS taxable in Ohio?
When the customer uses it in its business, generally yes. Ohio’s sales tax reaches automatic data processing, computer services and electronic information services provided for use in business, and most B2B SaaS falls into one of those. The same subscription sold to a consumer for personal use is generally not taxable. Collecting depends on nexus: more than $100,000 of Ohio sales or 200 separate transactions.
Do we send our 1099-NECs to Ohio?
Ohio’s W-2/1099 upload through OH|TAX eServices is for statements that report Ohio income tax withheld, and the reconciliations must tie to those statements. A startup that pays contractors without Ohio withholding reports them federally.
Our Ohio employee works from home. Which city tax do we withhold?
Usually the city where the employee actually works, which for a remote employee is the city they work from at home. Ohio’s 20-day rule lets you withhold for the principal place of work for the first 20 days an employee works in another city; from the 21st day you withhold for that city. A small employer — gross receipts under $500,000 the prior year — with a fixed Ohio location can withhold only for that location.
Is there an Ohio annual report?
No. Ohio corporations and foreign corporations licensed in Ohio don’t file an annual report with the Secretary of State and there is no franchise tax. The recurring Ohio filings are tax filings: withholding, municipal and school district returns, unemployment reports and, once you are large enough, the CAT.
Is Ohio’s R&D credit useful to a startup?
Rarely, early on. The credit is 7% of the increase in Ohio research spending over the prior three-year average, but it is claimed against the Commercial Activity Tax, is not refundable, and carries forward only seven years. A startup below the $6 million CAT exclusion has no CAT for the credit to reduce, so it can’t use the credit until its Ohio receipts grow past that line.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Ohio Department of Taxation
- Ohio Department of Taxation — Commercial Activity Tax
- Ohio Rev. Code 5751.03 — CAT rate and exclusion
- Ohio LSC — H.B. 96 (136th GA) final tax analysis
- Ohio Department of Taxation — 2026 Employer and School District Withholding Tax Filing Guidelines
- Ohio Department of Taxation — Sales and Use Tax
- Ohio Rev. Code 5741.01 — remote seller definitions and thresholds
- Ohio Adm. Code 5703-9-46 — Automatic data processing, computer services and electronic information services
- Regional Income Tax Agency — Municipal withholding: 20-day rule and small employers
- Ohio Rev. Code 718.011 — Municipal withholding on qualifying wages
- Regional Income Tax Agency — Municipal income tax law changes (H.B. 33)
- Ohio Department of Job and Family Services — Unemployment, employer contributions
- Ohio Rev. Code 4141.25 — Contribution rates
- Ohio Department of Commerce — Division of Industrial Compliance, 2026 minimum wage
- Ohio Rev. Code 4113.15 — Semimonthly payment of wages
- Ohio New Hire Reporting Center
- Ohio Bureau of Workers’ Compensation — Employers
- Ohio Secretary of State — Business Services
- Ohio LSC — State agency fees: Secretary of State
- Ohio Department of Commerce — Division of Unclaimed Funds, holder reporting
- Ohio Rev. Code 5751.51 — Research and development investment tax credit
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.