Ohio Payroll Tax Guide (2026)

Ohio is the hardest payroll state in the region to get right: the state rate collapsed to a flat 2.75% for 2026 with new withholding tables from August 1, but on top of that sit hundreds of city income taxes and 210 taxing school districts on conflicting address rules.^[8]

10 min read • Reviewed by Rajanikant Patel CPA • Verified Oct 1, 2026 • Sources: ODT, ODJFS, IRS

Quick Facts

Ohio payroll at a glance

Ohio employers withhold three separate income taxes from pay, state, municipal and school district, and fund unemployment insurance on their own on the first $9,000 of each worker’s wages.^[8]

State income tax withholding

1.600%–3.400% ^[2]

UI taxable wage base

$9,000 per employee ^[8]

New employer UI rate

2.70% ^[8]

Experienced UI rate range

0.40%–10.10% ^[8]

Employee-paid state payroll tax

None ^[8]

Social Security wage base

$184,500 ^[2]

FUTA net rate

0.6% = $42 per employee ^[14]

State minimum wage

$11.00 per hour ^[11]

Local minimum wage ordinances

None ^[11]

UI registration trigger

Employers register their unemployment tax account through The SOURCE,… ^[8]

Exempt salary threshold

$35,568 per year ^[11]

Additional Medicare threshold

Over $200,000, employee only ^[3]

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What changed for Ohio payroll in 2026

Six items moved for Ohio employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.

Flat 2.75% income tax arrives New withholding tables August 1 Bonus withholding now 2.75% Minimum wage $11.00 210 taxing school districts UI wage base still just 9,000

Treating the 20 day municipal rule as a free pass: Employers hear the occasional entrant rule and assume any employee who works fewer than 21 days in a city creates no withholding duty there. Two things break that: the safe harbor never covers the employee’s principal place of work, and the moment a worker hits day 21 in a city you must start withholding for that city for the rest of the year, with the option to go back and withhold for the first 20 days too. Track days by city for every travelling employee and check each work address in The Finder, because a job site three blocks over can sit in a different taxing municipality.^[5]

Estimate

2026 Ohio payroll tax calculator

Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.

Ohio · 2026 rates · per employee, per calendar year

Annual gross wages ($)

Cash wages subject to payroll tax, before any withholding.

Your UI contribution rate

Your exact rate comes from Ohio Department of Job and Family Services each year.

Custom UI rate (%)

FUTA basis

FUTA is 6.0% less a 5.4% credit where the state has no outstanding federal loan.

Employer pays

UI, on first $9,000–

FUTA, on first $7,000–

Social Security, 6.2%–

Medicare, 1.45%–

Employer payroll tax–

Withheld from the employee

Social Security, 6.2%–

Medicare, 1.45%–

Additional Medicare, 0.9% over $200,000–

Withheld from employee–

True cost of employment–

Employer tax as % of wages–

Total payroll tax, both sides–

State income tax withholding is not included above: it depends on the employee’s Ohio IT 4, Employee’s Withholding Exemption Certificate. The IT 4 is also how an employee tells you which school district they live in. and filing status, so it cannot be estimated from gross pay alone.

Rates & Nexus

Payroll tax rates & the nexus question

Ohio runs two state payroll taxes. The table below is the whole state layer for 2026.^[8]

The state payroll taxes

Tax	Paid by	2026 rate	Wage base
UI	Employer	0.40%–10.10%; 2.70% new	$9,000
Income tax withholding	Employee	1.600%–3.400%	No limit

Ohio does not use lettered schedules. Each experience rated employer’s rate is built from its own account balance measured against average annual payroll, then a mutualized rate is added to recover charges that cannot be billed to any one employer, and a minimum safe level adjustment is layered on when the trust fund sits below its safe level. The mutualized rate is capped at 0.5% and cannot fall below 0.1% while there are excess charges. A new construction employer is assigned the construction industry average rate or 2.7%, whichever is greater.^[8]

Supplemental wages have their own rate. Bonuses, commissions and other supplemental payments are withheld at 2.75% when paid separately from regular wages. That is a state rate only; federal supplemental withholding is a separate 22% layer.^[2]

Who has to register

Employers register their unemployment tax account through The SOURCE, Ohio’s unemployment insurance tax system, once they have covered employment in Ohio. ODJFS issues the account number and the annual contribution rate through that same system.^[8] Income tax withholding is administered separately by Ohio Department of Taxation, so most employers end up with two state account numbers, not one.

Multistate and remote employees

When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.

1. Localisation of service→
2. Base of operations→
3. Place of direction & control→
4. Employee’s residence

One remote employee is usually enough. A single person working from home in Ohio generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.

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Compliance

Registration & return filing

Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.^[8]

How to register

Cross the wage threshold→
The SOURCE→
Receive account number→
File & deposit online

Deposit schedule

Your schedule is set by combined Ohio and school district withholding during the look back period, the 12 months ending June 30. At $2,000 or less you file quarterly, due the end of the month after each quarter. Above $2,000 but under $84,000 you file monthly, due within 15 days after month end. At $84,000 or more you are a partial weekly filer paying by EFT within three banking days after each Saturday through Tuesday and Wednesday through Friday payroll period, and if a single pay period produces $100,000 or more of Ohio withholding that portion is due the next banking day. Partial weekly filers still remit school district withholding monthly.^[2]

Returns, reports & due dates

Form	What it is	Due
Quarterly contribution and wage report filed in The SOURCE	Quarterly unemployment return	April 30, July 31, October 31, January 31
IT 501 for each Ohio payment period and IT 941 for the annual reconciliation, SD 101…	Income tax withholding returns	Your schedule is set by combined Ohio and school district withholding
Annual reconciliation	Year-end withholding reconciliation	January 31
Form 941	Federal quarterly return	Last day of the month after quarter end
Form 940	Federal unemployment, annual	January 31
New hire report	Report of newly hired employees	Within 20 days of start date

Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.^[8]

Watch the rate you actually withhold on: Ohio law leaves a single 2.75% rate on taxable nonbusiness income above $26,050 and no tax at or below it, but payroll does not use that single figure. Employers withhold from the percentage-method tables effective 1 August 2026, which run in three tiers of 1.600%, 2.990% and 3.400% breaking at $26,050 and $100,000 annualised. Coding Ohio as a flat 2.75% withholding rate under-withholds on higher earners.^[2]

Pricing

Payroll Pricing

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Line items the big providers quietly bill for

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Setup fee

one-time onboarding

billed
extra

Every payroll run

each pay cycle

billed
extra

Off-cycle payroll

corrections & bonuses

billed
extra

Year-end filings

W-2s, 1099s & more

billed
extra

All you actually pay

Per employee, per pay run

$6 /emp

Plus a flat $40 minimum per pay run. That’s the whole bill.

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Wage Base

Subject wages vs. exempt payments

Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.^[8]

Subject wages

Salaries, hourly pay, overtime and piece rates
Commissions, bonuses and incentive pay
Most cash tips reported by the employee
Vacation, holiday and paid sick leave when taken as wages
Severance and payments in lieu of notice
The cash value of meals and lodging provided as compensation
Employer contributions to a non-qualified deferred compensation plan

Not subject

Reimbursements of genuine business expenses under an accountable plan
Employer contributions to a qualified retirement plan
Employer-paid premiums for accident and health insurance
Most third-party sick pay after the sixth calendar month
Payments to a genuine independent contractor
Workers compensation benefits

The wage base is per employer, per year, not per job. If you hire someone in August who already earned $9,000 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.

Reference

Glossary of key terms

Taxable wage base: The slice of each employee’s annual pay that unemployment tax is calculated on. In Ohio that is $9,000 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
Experience rating: The method Ohio Department of Job and Family Services uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
New employer rate: The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
Ohio IT 4, Employee’s Withholding Exemption Certificate. The IT 4 is also how an employee tells you which school district they live in.: The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Ohio Department of Taxation.
Reserve account: The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
Successor employer: A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
Localisation of service: The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
FUTA credit reduction: A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
Supplemental wages: Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Local withholding: Income or occupational tax levied by a city, county or school district and withheld by the employer alongside state tax. It is assessed separately from the state layer.

Federal, State & Local

Ohio payroll tax, layer by layer

Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.

Layer 1: Federal

Tax	Rate	2026 base
Social Security	6.2% each side	$184,500
Medicare	1.45% each side	No limit
Additional Medicare	0.9% employee only	Over $200,000
FUTA, standard	0.6% net	$7,000
Federal income tax	Per Form W-4	No limit

Ohio has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.^[14]

Layer 2: State

Tax	Rate	2026 base
UI, new employer	2.70%	$9,000
UI, experienced	0.40%–10.10%	$9,000
Income tax, standard	1.600%–3.400%	No limit
Income tax, supplemental	2.75%	No limit

Layer 3, county & city: a real third layer

Ohio has two employer withheld local income taxes on top of the state tax. Hundreds of Ohio cities and villages levy a municipal income tax, and employers must withhold for the municipality where the work is physically performed, not just where the office is. Section 718.011 of the Revised Code gives an occasional entrant safe harbor: you generally need not withhold for a municipality where an employee works 20 or fewer days in a calendar year, but from the twenty first day you must withhold there for the rest of the year, and the rule never applies to the employee’s principal place of work. Small employers withhold everything to the single municipality where their fixed location sits. Separately, 210 school districts levied an income tax as of January 2026, withheld by residence address rather than work address, on either a traditional or an earned income tax base. Look up both by street address in The Finder rather than by city name, because municipal and school district boundaries do not line up.^[6]

The state minimum wage is $11.00 an hour, effective 2026-01-01. The tipped cash wage is $5.50. No local ordinance sets a higher floor. No Ohio city sets its own minimum wage. The 11.00 dollar state rate applies only to employers with annual gross receipts of $405,000 or more. Smaller employers and workers under 16 may be paid the federal rate of $7.25. The Ohio Constitution lets an employer pay a tipped worker no less than half the minimum wage, which puts the tipped cash wage at $5.50 with a 5.50 dollar maximum tip credit. Ohio indexes the rate to inflation and adjusts it every January 1, so the next step takes effect January 1, 2027.^[11]

Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.^[11]

FAQ

Ohio payroll FAQs

For taxable years beginning in 2026 Ohio taxes nonbusiness income at a single 2.75% rate on the amount above $26,050, with no tax below that. The Department of Taxation issued new employer withholding tables effective August 1, 2026 to reflect the change, and the flat rate for supplemental compensation such as bonuses is 2.75%.

Withhold for the municipality where the work is physically performed. Look up each work address, not the city name, in The Finder at the Ohio Department of Taxation, because municipal boundaries do not follow mailing addresses. Under the occasional entrant rule you generally need not withhold for a city where an employee works 20 or fewer days in the year, but that safe harbor never applies to the employee’s principal place of work.

From the twenty first day you must withhold and remit to that municipality for every remaining day of that calendar year. You may also elect to go back and withhold for the first 20 days, in which case that tax is refundable to the employee. Small employers are exempt from the day counting entirely and instead withhold everything to the single municipality where their fixed location is.

School district income tax follows where the employee lives, not where they work, which is the opposite of the municipal rule. As of January 2026 there are 210 taxing districts, some on a traditional tax base and some on an earned income base. The employee tells you their district on the IT 4, you pay it on the SD 101 and reconcile on the SD 141 by January 31.

It depends on your combined Ohio and school district withholding in the 12 months ending June 30. At $2,000 or less you file quarterly, above $2,000 but under $84,000 you file monthly within 15 days of month end, and at $84,000 or more you are a partial weekly filer paying by EFT within three banking days of each semiweekly payroll period. If a single pay period generates $100,000 or more of Ohio withholding, that amount is due the next banking day.

Ohio has one of the smallest wage bases in the country at $9,000, so a new employer at the standard 2.70% pays a maximum of $243 per employee per year. Experience rated employers for 2026 fall between 0.40% and 10.10%, which is $36 to $909 per employee. Rates are assigned in The SOURCE and include a mutualized component and, when the trust fund is low, a minimum safe level adjustment.

$9,000 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.

$11.00 an hour. No local ordinance sets a higher rate. The tipped cash wage is $5.50.

April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.

Verification

Sources & methodology

Methodology: every rate, threshold and due date on this page was taken from the administering agency’s own published material for the 2026 tax year, checked on Oct 1, 2026. Where a federal figure applies it comes from the IRS, SSA or US Department of Labor. 6 data points on this page could not be confirmed against a primary source and are either omitted or marked as not published, rather than estimated. Rates change, and some change mid-year, so confirm against your own rate notice before running a payroll.

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