The Tax Foundation

Research Areas

Ohio

The Facts on Ohio’s Tax Climate

Here are some basic facts on Ohio’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 17 in Ohio
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Ohio taxpayers had to work until April 17 (ranked 28th highest nationally) to pay their total tax bill, six days earlier than national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: Indiana, April 17 (ranked 29th); Pennsylvania, April 21 (ranked 45th); West Virginia, April 8 (ranked 47th); Kentucky, April 10 (ranked 45th); and Michigan, April 16 (ranked 31st).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Ohio's State/Local Tax Burden Among Highest in Nation in 2007
During the last three decades Ohio's state and local tax burden has steadily risen from among the nation's lowest in the 1970s to among the nation's highest today. Estimated at 12.4% of income, Ohio’s state/local tax burden percentage ranks 5th highest in the nation, well above the national average of 11.0%. Ohio taxpayers pay $4,597 per capita in state and local taxes, and per capita state income is $37,020.
Ohio's State-Local Tax Burden, 1970-Present

Ohio's 2008 Business Tax Climate Ranks 46th
Ohio ranks 46th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Indiana (12th), Pennsylvania (27th), West Virginia (37th), Kentucky (36th) and Michigan (29th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Ohio's Individual Income Tax System
Ohio's personal income tax system is one of the nation's most complex and is composed of nine separate tax brackets. Ohio's top rate of 6.555% kicks in at an income level of $200,000. Among states that levy personal income taxes, Ohio's top tax rate is 19th highest nationally. Ohio's 2005 individual income tax collections were $1,140 per person, which ranked 8th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Ohio's Corporate Income Tax System
A gross receipts-style tax, the Commercial Activity Tax (CAT) was implemented in 2005. It will be phased in through 2010, while the Corporate Franchise Tax (Ohio's corporate income tax) is phased out. Starting April 1, 2008 the CAT rate is .208%. For tax year 2008 companies owe 40% of Corporate Franchise Tax liability. In 2006, state-level corporate tax collections (excluding local taxes) were $96.04, which ranked 40th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Ohio's Sales Tax Rate Slightly above National Median; Gasoline Tax among Nation's Highest
Ohio's state sales tax rate stands at 5.5%, which is just slightly above the national median of 5.4 percent. In fiscal year 2005, Ohio collected approximately $1,112 per capita in general sales taxes, which ranked 34th highest nationally. Ohio's gasoline tax stands at 28 cents per gallon, ranking 17th highest nationally.  Ohio's cigarette tax stands at $1.25 per pack and ranks 21st highest nationally. The sales tax was adopted in 1934, gasoline tax in 1925, and the cigarette tax in 1931.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Ohio Property Taxes: Middle of the Pack
Ohio is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Ohio's localities collected $11,192,192,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. The state government collected $40,636,000 in property taxes in FY2004, bringing the total property taxes collected in Ohio to $11,232,828,000, which is $981 per capita, ranking 25th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Ohio is a Beneficiary State
Ohio taxpayers benefit about equally compared to the average state from federal spending. Per dollar of Federal tax collected in 2005, Ohio citizens received approximately $1.05 in the way of federal spending. This ranks Ohio 31st highest nationally. This represents a slight rise from 1995 when Ohio received $0.97 per dollar of taxes in federal spending, ranking it 32nd nationally. Neighboring states and the amount of federal money received per dollar of federal taxes collected were: Indiana ($1.05), Pennsylvania ($1.07), West Virginia ($1.76), Kentucky ($1.51) and Michigan ($0.92).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Articles from the Tax Foundation