Ohio income tax rate for 2026, plus city and school district taxes

For 2026, Ohio taxes nonbusiness income at one rate, 2.75%. The tax is figured on Ohio taxable nonbusiness income: Ohio adjusted gross income, less business income and personal exemptions. If that is $26,050 or less, no tax is due. Above $26,050, the first $26,050 is taxed too, at a fixed $332, and every dollar over $26,050 is taxed at 2.75%.

The change comes from House Bill 96, the state budget for fiscal years 2026 and 2027, which phased Ohio down to one rate over two years. For 2025, two brackets remained: $342 plus 2.75% of the amount over $26,050, up to $100,000, and $2,394.32 plus 3.125% of the amount over $100,000. The bill also suspended the yearly inflation adjustment of the $26,050 threshold and of personal exemptions for 2025 and 2026, so both stay where they were.

The cut is small in the middle and larger at the top. In the Department of Taxation’s own example, $68,050 of taxable nonbusiness income owed $1,497 for 2025; under the 2026 rule it owes $1,487, about 2.2% of that income. On $150,000, the tax falls from $3,957 for 2025 to $3,741 for 2026, rounded to the dollar as on the return. Credits come off these amounts, and city and school district taxes are extra.

The Ohio return, form IT 1040, starts from federal adjusted gross income and adjusts it on the Ohio Schedule of Adjustments. Ohio adds back some items, such as interest on other states’ municipal bonds, and deducts others. For 2025 the deductions included taxable Social Security benefits, contributions to a 529 college savings plan of up to $4,000 per beneficiary, medical care costs above 7.5% of federal adjusted gross income, health insurance premiums not deducted elsewhere, and up to $300 of education expenses for an Ohio teacher.

Personal exemptions come next: one each for you, your spouse and each dependent. Their size depends on modified adjusted gross income, which is Ohio adjusted gross income plus the business income deduction. For 2025 they were $2,400 each at $40,000 or less, $2,150 from $40,001 to $80,000 and $1,900 above that, with none at $750,000 or more. With indexing suspended, the same amounts apply for 2026, but the cutoff drops to $500,000, which also ends the joint filing credit at that income.

Business owners get a separate break. Ohio deducts the first $250,000 of business income, or $125,000 for each spouse filing separately, and taxes the rest at a flat 3% instead of the nonbusiness rates. Business income under Ohio law generally means profit from a sole proprietorship or pass-through entity, plus pay from a pass-through entity you own at least 20% of, whether it comes as wages or as payments to a partner. House Bill 96 left the deduction and the 3% rate unchanged for 2026, so business income above the deduction is now taxed at a slightly higher rate than other income.

Ohio does not tax Social Security. Whatever part of your benefits is taxable on the federal return is deducted on the Ohio Schedule of Adjustments, and so are tier 1 railroad retirement benefits and military retirement pay. Other retirement income in federal adjusted gross income, such as pensions and distributions from 401(k) plans and traditional IRAs, is generally taxable in Ohio.

Instead of exempting pensions, Ohio offers small credits, each available only if modified adjusted gross income less exemptions is under $100,000. The amounts are written into Ohio law and apply for 2026 as they did for 2025.

Where you live when the money arrives decides who taxes it. The Department of Taxation says only the state of residence can tax retirement income, so an Ohio resident’s pension is taxable in Ohio even if it was earned in another state, and Ohio cannot tax a pension paid after you have moved away. Local taxes are gentler: state law bars cities from taxing pensions and Social Security, and a school district on the earned income base does not tax retirement income, though a traditional district can.

Every Ohio resident and part-year resident is subject to Ohio income tax. A nonresident must file too if they had Ohio-source income, such as wages earned in Ohio, Ohio lottery or casino winnings, or income from Ohio property or an Ohio business, unless the reciprocity exception below applies. You do not have to file if your Ohio adjusted gross income is zero or less, if your exemptions equal or exceed it, or if your senior citizen, lump sum distribution and joint filing credits cover your whole tax. Owing school district tax overrides all three. And for 2025 the Department recommended filing anyway once federal adjusted gross income passed $28,450, to avoid delinquency notices.

The return is form IT 1040 with its schedules. Part-year residents and nonresidents add form IT NRC to claim the nonresident credit for income not earned or received in Ohio, and residents taxed by another state on part of their income claim the resident credit on form IT RC. The school district return, form SD 100, is a separate return, required if you lived in a district with an income tax and owe it. Someone who owes no Ohio tax and is not claiming a refund can file the short IT 10 instead of the IT 1040.

Returns for 2026 are due April 15, 2027, for the IT 1040 and the SD 100 alike. Ohio has no extension form of its own: with a federal extension, the Ohio returns are due October 15, 2027, with a copy of the extension or its confirmation number, but the tax is still due April 15, 2027, and interest runs on anything paid later. If you expect to owe more than $500 for 2026 after withholding and credits, the Department says to make estimated payments on form IT 1040ES, on the schedule below.

Ohio’s cities and villages levy their own income taxes, separate from the state tax and filed on their own returns, under the rules in chapter 718 of the Ohio Revised Code. The Department of Taxation estimates that 674 municipalities, 248 cities and 426 villages, levied an income tax in 2024, at rates up to 3%; the most common rates were 1%, 1.5% and 2%. A municipality needs voter approval to tax income at more than 1%.

City tax is mainly a tax on wages and business profits. State law exempts Social Security, pensions and other retirement benefits, unemployment compensation and military pay, and also investment income such as interest, dividends and capital gains, except in two cities whose voters chose in 1988 to keep taxing it. Generally you owe tax to the city where you work, and the city you live in can tax your income as well; whether it credits the tax you paid where you work, and how much, is up to each city.

Each municipality runs its tax itself or through an administrator such as the Regional Income Tax Agency (RITA) or the Central Collection Agency. The Department of Taxation administers city tax only for businesses that opt in for their net profit tax, and for certain electric and telephone companies. Individual city returns are due on the state due date, April 15, and a federal extension also extends them, to October 15. Employers withhold for the city where you work, but generally not for a city where you work 20 or fewer days a year, unless it is your principal place of work. The Department’s Finder gives the city and school district rates for any Ohio address.

Ohio school districts can levy an income tax too, but only with voter approval and only on their residents: the tax follows where you live, not where you work. The Department of Taxation collects it for the districts on form SD 100, due the same day as the IT 1040. For 2026, more than 200 districts have the tax, at rates from 0.25% to 2%, and six of them, including Westerville and Findlay, started it on January 1, 2026.

Each district uses one of two bases. A traditional district taxes modified adjusted gross income less exemptions, which can include pensions and investment income. An earned income district taxes only wages and net earnings from self-employment, so retirement income, interest, dividends and capital gains are left out. You may owe school district tax even when you owe no Ohio income tax, and then you file both returns.

Your district is set by your home address. Look it up, with its number and rate, in the Department’s Finder, and give your employer the four-digit district number on form IT 4 so school district tax is withheld from your pay. If you moved during the year, the tax applies only to income received while you lived in a taxing district, and one SD 100 covers every district you lived in.

Ohio adopts federal tax changes only when its legislature passes a conformity law. Senate Bill 9, effective March 5, 2026, brought Ohio’s references to the Internal Revenue Code up to date, including the July 2025 tax law (Public Law 119-21). Changes that alter federal adjusted gross income, the first line of the Ohio return, carry over to Ohio.

The new federal deductions do not. For 2025 through 2028 the federal return allows deductions for qualified tips, qualified overtime pay, interest on certain car loans and an extra $6,000 for each person 65 or older, all on Schedule 1-A and subtracted after adjusted gross income. The Ohio Legislative Service Commission’s analysis of SB 9 says the tips and overtime deductions “do not flow through to Ohio taxable income,” and the car loan and senior deductions sit on the same schedule.

So for 2026, tips and overtime pay remain fully taxable on the Ohio return, and they count as wages for city tax and for an earned income school district too. Ohio has no matching senior deduction, though its own $50 senior citizen credit still applies. A bill for a state overtime deduction, House Bill 39, was still in a House committee in October 2026.

Ohio has reciprocity agreements with Indiana, Kentucky, Michigan, Pennsylvania and West Virginia, and they cover wages only. A full-year resident of one of those states pays no Ohio income tax on wages earned in Ohio, does not have to file an Ohio return if wages are the only Ohio income, and can stop Ohio withholding by giving the employer form IT 4. An Ohio resident who works in one of those states owes Ohio tax on that pay instead, and the Ohio resident credit does not apply to it.

The agreements do not reach other income, such as business income, rent, capital gains or lottery winnings, and they do not reach city taxes: a Kentucky resident who works in Cincinnati still owes Cincinnati’s tax. Where another state does tax an Ohio resident’s income, the resident credit on form IT RC is the lesser of that state’s tax or the Ohio tax on the same income, and there is no credit for tax paid to a city or a foreign country.

Moving into or out of Ohio makes you a part-year resident for that year. You file the IT 1040 with form IT NRC: Ohio taxes everything received while you were a resident and only Ohio-source income for the rest of the year, and school district tax applies only to the time you lived in a taxing district. If you leave but keep an Ohio home, Ohio presumes you are still a resident. For a later full year, not the year you move, you can secure nonresident status by checking the Ohio Nonresident Statement box on your IT 1040 or IT 10 by October 15 after the year ends, if you meet all five tests below.