Withholding Taxes: Ohio
Federal law and guidance on this subject should be reviewed together with this section.
Author: Vicki M. Lambert, The Payroll Advisor
- Ohio employers must withhold state income tax from the pay of employees who are Ohio residents. For employees who are Ohio residents but work in another state, the employer must withhold for the other state's taxes, unless the other state does not require withholding. Withholding is required on work performed by a nonresident within Ohio, unless a reciprocal agreement is in effect with the nonresident's state of residence or the nonresident is considered a short-term business traveler. Ohio has reciprocal agreements with Indiana, Kentucky, Michigan, Pennsylvania and West Virginia. Expatriates are subject to withholding on foreign earned income. See Withholding on Residents, Nonresidents and Expatriates.
- Form IT-4 is used by employers to determine the number of exemptions that employees are entitled to claim and how much Ohio income tax to withhold from employees' pay. See Employee's Withholding Allowance Certificate.
- Employers must withhold on supplemental wages at a flat rate of at least 3.5%. See Supplemental Wages.
- Ohio employers must give all employees two copies of Form IT-2, or federal Form W-2, Wage and Tax Statement, to report the amount of wages paid and tax withheld in the previous year, by January 31 of the following calendar year. See Form W-2 Requirements.
- Ohio employers must maintain records of all employees from whom tax was withheld and keep them available for inspection during regular business hours. See Recordkeeping Requirements.
- In addition to state income taxes, municipal income taxes are imposed directly by many Ohio cities and villages. Currently, approximately 577 municipalities (236 cities and 341 villages) levy a tax. The tax generally applies to qualifying wages, salaries and other compensation earned by residents of the municipality and by nonresidents working in the municipality. See Municipal Income Taxes.
- The city of Cincinnati imposes an income tax which must be withheld by employers. For purposes of the tax, taxable earnings include, but are not limited to, all salaries, tips, incentive payments, fees, commissions, and deferred compensation. See City of Cincinnati Income Tax.
- All employers within, or doing business within, the city of Canton that employ one or more persons on a salary, wage, commission or other compensation basis must withhold city income taxes from their employees' pay. The tax must be withheld for all qualifying wages earned by city residents and nonresidents for work performed in the city. See City of Canton Income Tax.