Ohio Municipal Income Taxes: How the System Works

Ohio cities and villages may levy an income tax on the income of residents and, in most cases, on income earned by non-residents working inside the municipality. That work-based reach is what makes Ohio unusual: like Philadelphia and unlike Maryland, you can owe a local tax to a place you have never lived.

The 1% rule. Under Ohio Revised Code section 718.04, no municipal corporation may levy an income tax at a rate above 1% without the approval of a majority of the electors voting on the question. Rates above 1% therefore exist only where voters have specifically approved them — which many have.

In 2018, the most recent count we could source from the Department of Taxation's local government data series, 642 municipalities levied the tax — 242 cities and 400 villages. That number has grown steadily: it was 614 in 2014 and 635 in 2017.

Credits for tax paid elsewhere. Because you can owe tax both where you live and where you work, most municipalities give residents a credit for tax paid to another municipality. The size of that credit is set locally and is often less than 100%, so working in a higher-tax city than you live in can leave you owing both.

Separately from municipalities, Ohio school districts may levy their own income tax on residents. Unlike the municipal tax, this one is residence-only — it follows the district you live in, and working in a taxing district you do not live in creates no liability.

Two different bases. This is the part that catches people out. Each district's tax uses one of two bases, fixed by the ballot language that created it:

• Traditional base — modified adjusted gross income less exemptions. This reaches retirement income, interest and other unearned income.
• Earned income base — earned income only, calculated separately. This does not reach pensions, Social Security or investment income.

Two neighbours on the same street in different districts, with identical income, can therefore owe very different amounts — and a retiree's bill can differ by the entire tax depending on which base their district chose.

The school district income tax is filed with the state on Ohio form SD 100, not with the district.

Ohio publishes The Finder, an official address-level lookup run by the Department of Taxation. Entering a street address returns the municipality, the school district, and the current rate for each. It is authoritative and updated as rates change.

• The Finder — municipal income tax by address
• The Finder — school district income tax by address

Your Ohio state tax is separate from both and is the same wherever in Ohio you live — see the Ohio state income tax page.