If you live in Ohio, it’s important to understand the state’s tax system so you can be aware of what you owe and when. When you stay abreast of changes to local tax laws and rates, you may find it easier to budget and understand where your tax money is going. By ensuring you file the proper amount of taxes on time, you can avoid expensive consequences, such as late penalty payments.
The Ohio Department of Taxation is in charge of several types of taxes, including sales tax and the state’s oldest tax: the real property tax. This tax has been ad valorem (or based on property value) since its inception in 1825. While the property tax rates may have changed over the years, the law to collect taxes from every property owner in the state has stayed the same. Review this guide to find out more about current tax rates and regulations in the state.
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Ohio Income Tax
Like many other states, Ohio collects personal income tax from residents. When you earn income, you must pay taxes on the money you earned throughout the year. The tax rate you’re responsible for paying depends on how much income you earned and the tax bracket you fall in. Ohio lowered tax rates by 4% in 2019. The current 2019 tax brackets are as follows:
|Taxable Income Earned||Tax Rate|
|0 to $21,750||No taxes owed|
|$21,751 to $43,450||$310.47 and 2.85% on income over $21,751|
|$43,450 to $86,900||$928.92 and 3.326% on income over $43,450|
|$86,900 to $108,700||$2,374.07 and 3.802% on income over $86,900|
|$108,700 to $217,400||$3,202.91 and 4.413% on income over $108,700|
|Over $217,400||$7,999.84 and 4.797% on income over $217,400|
Every Ohio resident, part-year resident, or nonresident earning Ohio-sourced income must claim all eligible income earned over $0. Keep in mind, in addition to the Ohio individual income tax, you’re also responsible for paying federal income tax on your earnings.
Ohio Sales Tax
When you buy, lease, or rent tangible personal property or obtain certain services in Ohio, sales tax is due to the state. The current sales tax rate is 5.75%. When you make a purchase, the retailer automatically adds the state sales tax to your total amount due.
If you make an out-of-state taxable purchase, such as through an online or catalog retailer, you must pay a use tax of 5.75%. You pay the use tax within the transaction and the seller remits this tax to the state.
Regional transit authorities and counties can set their own additional local sales or use taxes for purchases made within their boundaries. They can increase the sales tax rate in .25% increments up to 3%. However, the total rate cannot be more than 8.75% for both state and local sales taxes combined.
Ohio Property Tax
All states impose a property tax on real property that’s owned within the state (unless the owner is a nonprofit organization). In Ohio, if you’re a property owner, you must pay taxes on your property every year, which are calculated as a percentage of the value of your property.
An assessor values your property using strict appraisal guidelines once every six years. If you own farmland, the assessor uses the Current Agricultural Use Value (CAUV) to value your property. It’s valued according to its current use rather than its potential use, which usually provides a lower valuation for tax purposes. The property tax rate is set by the county or city, so the amount of taxes you’re responsible for paying can vary, depending on where your property is located.
In 2016, Ohio’s average tax rate was 92.93 mills. A mill is equal to one dollar per every $1,000 in the assessed value of the taxable property. Therefore, one mill is equivalent to .001%.
You may also qualify for property tax exemptions that lower the amount of taxes you owe on the property you own. In Ohio, you can file for homestead exemption, which allows up to $25,000 of your property’s assessed value to be exempt from taxes. To qualify, you must meet the program’s qualifications, including the income threshold.
Ohio Estate Tax
Some states collect an estate tax, which is a tax on the value of an individual’s estate after they die. Ohio no longer collects estate tax of any kind from residents. The passage of the 2012 Budget Bill, House Bill 153 put this legislation into law as of January 1, 2013. Therefore, individuals with estates who passed away on or after January 1, 2013, are not required to pay estate taxes.
Filing Taxes in Ohio
If you live in Ohio and have earned an income, you’re responsible for filing income taxes with the state in addition to the federal government. You can file your Ohio income return as early as January 27, 2020, and you must file your income tax return by April 15 each year.
If you own property in the state, you’re also responsible for paying property taxes to the Ohio Department of Taxation. When your property assessment is complete, you’ll receive a notification that informs you of the property taxes you owe and when you must file.
You can choose to file taxes by mail or online using the Ohio Department of Taxation I-File system. To complete your taxes online, you must first create an account and online profile. You must provide your personal information, such as your Social Security Number, and other information, such as your address, so your taxes can be accurately calculated by the system.
You can make your tax payment using a bank account online. You can also use the system to review your past tax returns. If you have trouble using the online tax filing system, you can contact the customer service line at 1-800-282-1780.
If you earned income in Ohio or own a property in the state, it’s important to understand the tax laws and regulations as they apply to you. By understanding these details and recent changes to tax legislation, you can ensure you pay the right amount in taxes when they’re due.
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