Key figures
Ohio payroll
2026, with sources
- State income tax (2026)
- 2.75% flatFlat 2.75% on income over $26,050; withholding tables updated for wages paid on and after Aug 1, 2026.
- New-employer UI rate
- 2.7% + 0.15% fee2.7% contribution rate (construction is higher), plus the 0.15% technology and customer service fee for 2026–2027.
- Minimum wage (2026)
- $11.00/hrNon-tipped; applies to employers with gross receipts over $405,000 (smaller employers: $7.25).
- Municipal withholding
- 20-day ruleWithhold for the city where work is done after an employee’s 20th day there.
Three income taxes on one paycheck
An Ohio paycheck can carry three income taxes: Ohio state tax (a flat 2.75% above $26,050 for 2026, after H.B. 96), a municipal income tax for the city where the employee works, and a school district income tax if the employee lives in a district that levies one. State and school district withholding are filed together with the Ohio Department of Taxation through OH|TAX eServices on Forms IT 501 and SD 101; municipal withholding is filed with each city or its administrator, such as RITA.
Take a startup with no Ohio office that hires one engineer who works from home in Dublin and lives in a school district with an income tax. It registers for Ohio withholding and school district withholding, withholds Dublin municipal tax because the employee works there, files ODJFS quarterly reports, and buys a BWC policy. None of that changes if the employee is the company’s only Ohio connection.
Unemployment and the 2026 fee
ODJFS charges contributions on the first $9,000 of each employee’s wages. A new employer starts at 2.7% (higher in construction). For 2026 and 2027, H.B. 96 adds a 0.15% technology and customer service fee on the same wages, collected with quarterly contributions; because it doesn’t fund benefits, it isn’t a state contribution for the federal Form 940 credit.
Per employee, the arithmetic is small and fixed: a new employer pays 2.7% of $9,000, $243, plus the 0.15% fee, $13.50, for $256.50 a year once the employee has earned $9,000. A five-person team costs about $1,282.50 a year in Ohio unemployment tax, most of it paid in the first quarter because the wage base fills quickly.
Wages, pay days and leave
Ohio’s minimum wage is $11.00 an hour for 2026 for employers with annual gross receipts over $405,000, adjusted every January for inflation under the state constitution; smaller employers pay the federal $7.25. Ohio requires wages to be paid at least semimonthly. There is no state paid family leave program and no statewide paid sick leave mandate; leave policy in Ohio is the employer’s to write.
New hires go to the Ohio New Hire Reporting Center within 20 days. Ohio has reciprocity with Indiana, Kentucky, Michigan, Pennsylvania and West Virginia for state income tax.
Deadlines
- Within 15 days after the end of each monthOhio and school district withholding payments (monthly filers)IT 501 / SD 101
- Last day of the month after the quarterQuarterly filersIT 501 / SD 101
- Jan 31Annual withholding reconciliations, with W-2 uploadIT 941 / SD 141
- Within 20 days of hireNew-hire report to the Ohio New Hire Reporting Center
The federal baseline
This page covers what Ohio adds. The federal rules underneath it apply here too.
Common questions
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.
What is the school district tax on our Ohio payroll?
School district income tax follows where the employee lives, not where they work. If an employee lives in a school district with an income tax, you register (Form IT 1R), withhold it, file Form SD 101 with your state withholding, and reconcile on Form SD 141 by January 31. The district number goes on the W-2.
Payroll next door
- INIndiana payrollIndiana withholds 2.95% state tax plus a county tax fixed by the employee’s January 1 county; new employers pay 2.5% UI on the first $9,500, and the minimum wage is $7.25.
- KYKentucky payrollKentucky payroll is 3.5% state withholding plus local occupational taxes where employees work, unemployment insurance at 2.7% on $12,000 for new employers, and workers’ comp from the first employee.
- MIMichigan payrollMichigan withholds a flat 4.25%, charges new employers 2.7% UI on the first $9,000, pays $13.73 an hour in 2026, requires paid sick time from every employer and has 24 city income taxes.
- PAPennsylvania payrollPennsylvania’s state payroll is light: 3.07% flat withholding and UC on the first $10,000. The work is local: earned income tax under Act 32, the Local Services Tax, and Philadelphia’s 3.735% Wage Tax.
- WVWest Virginia payrollWest Virginia payroll withholds 2.11% to 4.58%, pays unemployment on the first $9,500, and has short timelines: new hires and contractors reported within 14 days, wages at least twice a month.
How Ohio compares
- No tax on wagesStates with no state income tax on wagesOhio: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programOhio: no state program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesOhio: city, county or district taxes on wages. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Ohio guide
- AccountingAccounting and state tax in OhioCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in OhioSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in OhioPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in OhioRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in OhioCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Ohio LSC — H.B. 96 (136th GA) final tax analysis
- 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
- Regional Income Tax Agency — Municipal withholding: 20-day rule and small employers
- Ohio Rev. Code 4113.15 — Semimonthly payment of wages
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.