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 11 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 2009, Ohio taxpayers had to work until April 11 (ranked 21st highest nationally) to pay their total tax bill, two days earlier than national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are: Indiana, April 8 (ranked 28th); Pennsylvania, April 14 (ranked 11th); West Virginia, April 1 (ranked 45th); Kentucky, April 3 (ranked 41st); and Michigan, April 10 (ranked 24th).
Full study of Tax Freedom Day, nationwide and in each state
Ohio's State/Local Tax Burden Among Highest in Nation
Ohio taxpayers have gone from some of the least taxed in the 1970s to some of the most heavily taxed today, climbing 38 places from 45th highest in 1977 to 7th highest in 2008. Estimated at 10.4% of income, Ohio's state/local tax burden percentage ranks well above the national average of 9.7%. Ohio taxpayers pay $4,049 per capita in state and local taxes.
Ohio's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Ohio's 2008 Business Tax Climate Ranks 47th
Ohio ranks 47th 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 (14th), Pennsylvania (28th), West Virginia (36th), Kentucky (34th) and Michigan (20th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth 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 5.925% kicks in at an income level of $200,000. Among states that levy personal income taxes, Ohio's top tax rate is 26th highest nationally. Ohio's 2006 individual income tax collections were $1,201 per person, which ranked 11th 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, 2009 the CAT rate is .26%. For tax year 2009 companies owe 20% of Corporate Franchise Tax liability. In 2007, state-level corporate tax collections (excluding local taxes) were $114, which ranked 37th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
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 the national median. In fiscal year 2006, Ohio collected approximately $803 per capita in general sales taxes, which ranked 27th 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 22nd 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 $1,095.99 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. The state government collected $3.02 per capita in property taxes in FY2006, bringing the total property taxes collected in Ohio to $1,099.01 per capita, ranking 24th 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
