Ohio Paycheck Tax Calculator (2026 Flat 2.75%)

Ohio completed a remarkable transformation for 2026: the state income tax flattened to a single 2.75% rate on nonbusiness income above $26,050 under HB 96, finishing a phasedown that had a 3.125% top rate in 2025. The state layer is now one of the smallest among states that tax wages at all. The calculator above applies it.

What Ohio gives back at the state line it collects at the local line. Nearly every city and village levies a municipal income tax on wages earned there, at flat rates commonly between 1% and 2.5%, and about 200 school districts layer a separate income tax collected through the state return. A Columbus worker pays 2.5% municipal on top of 2.75% state, and the municipal tax starts from dollar one with no exemption threshold.

That two-layer structure is why Ohio paychecks confuse traveling physicians and remote workers more than almost any other state: the state return is easy, and the local returns are where the filing obligations multiply.

HB 96, signed June 30, 2025, finished Ohio’s multi-year flattening: for tax year 2026, a single 2.75% rate applies to nonbusiness income above $26,050, and income at or below $26,050 is exempt. The threshold is frozen rather than indexed. In 2025 the structure still had a 3.125% top rate, so 2026 filers see a genuine cut.

Business income runs on its own track: the first $250,000 of business income (for most joint filers) is deducted entirely under the Business Income Deduction, and business income above it is taxed at a flat 3%. For practice owners and 1099 physicians, the BID often matters more than the headline rate, since it can zero out Ohio state tax on a substantial share of practice profit. Municipal taxes, however, do not honor the BID.

Ohio municipal income taxes are flat, locally set, and capped in practice around 3%; Columbus and Cleveland charge 2.5%. The tax applies twice in concept: your workplace city taxes wages earned there (withheld by the employer), and your residence city taxes your income as a resident. A resident credit for tax paid to the workplace city prevents full double taxation, but the credit is set city by city: many credit 100%, others 50% or less, and some cap the credited rate.

That credit variance is the hidden cost of living in one suburb versus another. Working in a 2.5% city while living in a city that credits only half of it leaves a real residence-city balance due each year, and usually a local return to file. Remote and hybrid schedules complicate it further, since days worked from home shift wages from the workplace city to the residence city.

About 200 Ohio school districts levy their own income tax at rates from 0.25% to 2%, under either a traditional base (Ohio taxable income) or an earned-income base (wages and self-employment only). It is withheld by employers per your address and reconciled on a separate school district return filed with the state.

The classic failure mode is a move between districts without updating the employer, which either misses withholding (balance due plus penalty on a return many people do not know exists) or withholds for the wrong district. Residency for SDIT follows where you live, not where you work.

Ohio has wage reciprocity with all five neighbors: Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia. W-2 commuters across those borders pay only their home state on wages by filing the exemption certificate (Ohio Form IT 4NR for nonresidents working in Ohio). Municipal taxes are outside the agreements, so a Kentucky resident working in a levying Ohio city still pays that city’s tax.

For locum physicians the familiar caveat applies: reciprocity covers wages only. 1099 assignment income in a neighboring state runs through a nonresident return there with an Ohio resident credit. With Ohio’s state rate now at 2.75%, the credit cap is the lowest of any taxing state in our calculator set, so nearly any assignment state’s tax will exceed it and the excess is an unrecoverable cost priced into the contract, not recovered in April.

One worked contrast: a Cincinnati-based physician earns $120,000 of W-2 wages from a Pittsburgh hospital. Under Ohio-Pennsylvania reciprocity she files the Pennsylvania exemption certificate, pays no Pennsylvania state tax, and owes Ohio about $2,584 (2.75% of the amount above $26,050). But the Pittsburgh local earned income tax sits outside the state agreement and still applies to work performed there, and her home city taxes her as a resident with its own credit policy. Now rerun the same income as 1099 locum pay: reciprocity vanishes, Pennsylvania taxes it at 3.07% on a nonresident return, and Ohio’s credit caps at its own 2.75%, leaving the difference unrecovered. Same money, same commute, two different filing worlds.

Ohio employees file Form IT 4, which covers both state withholding and the school district number. The paycheck audit worth doing once a year: confirm state withholding is running against the 2.75% structure, confirm the municipal line matches your actual workplace city (and your residence city if your employer courtesy-withholds), and confirm the school district number matches your current address.

Bonuses are withheld at a flat state supplemental rate set by the Department of Taxation; with the 2026 flatten, verify the current rate on the state’s employer withholding tables rather than assuming last year’s figure. Municipal withholding on bonuses simply follows the flat city rate.

Ohio projections pay for themselves whenever the layers multiply. Physicians and practice owners using the Business Income Deduction, because the state exempts up to $250,000 of business income while every city taxes it in full, a divergence that changes quarterly estimates at both levels. Households that moved between suburbs or school districts mid-year, where withholding rarely catches up on its own. Cross-border commuters mixing W-2 reciprocity wages with 1099 income that reciprocity ignores. And remote employees splitting days between a workplace city and a home city with a partial credit, where the day count directly sets two local bills.

A realistic scenario: an emergency physician lives in a Columbus suburb with a 1% school district tax, works W-2 shifts downtown at 2.5% municipal, and adds $80,000 of 1099 coverage in Kentucky and West Virginia. Her projection has an Ohio return applying the BID to the 1099 profit, two nonresident state returns with credits capped at 2.75%, a workplace-city and residence-city reconciliation with a partial credit, an SD 100, and quarterly estimates split across four jurisdictions. Every one of those pieces is small; missing two of them is how five-figure cleanup bills happen.