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Historical Ohio tax policy information

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The historical Ohio tax policy information below is presented as it was written on Ballotpedia in 2015. For more current information regarding tax policy, click here.

Tax policy in Ohio
Budget Policy Logo on Ballotpedia.png
Tax rates in 2015
Personal income tax:
0.528% to 5.333%
State sales tax:
5.75%
Corporate income tax:
None
Tax revenues in 2014
Total tax collections:[1]
$27.021 billion
Tax collections per capita:[1]
$2,331
Rank:[1]
36
Public Policy Logo-one line.png
Total state expenditures • State debt • Ohio state budget and finances

Ohio generates the bulk of its tax revenue by levying a personal income tax and a sales tax. The state derives its constitutional authority to tax from Article XII of the state constitution.[2][3]

Tax policy can vary from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.[4]

HIGHLIGHTS
  • In 2014, according to the Federation of Tax Administrators, Ohio collected $27.021 billion in tax revenues. The state's tax revenues per capita were $2,331, ranking 36th highest in the United States.[5]

    • Tax rates

    Personal income tax

    See also: Personal income tax

    The personal income tax rates in Ohio for the 2015 tax year ranged from 0.528 percent to 5.333 percent. An individual's tax liability varies according to his or her tax bracket. A tax bracket is the income range to which a tax rate applies. In Ohio, there are nine income tax brackets.[6][7][8]

    The table below summarizes personal income tax rates for Ohio and neighboring states in 2015. Numerical rankings are tabulated by excluding states with no personal income tax (as well as New Hampshire and Tennessee, which charge income tax only on dividends and interest) and are based on the highest possible tax rate for which an individual might be liable. Because some states are excluded from the rankings and a few share common uppermost rates, there are 34 numerical rankings, with 1 indicating the highest uppermost rate and 34 indicating the lowest.[7]

    Personal income tax rates, 2015
    State Tax rates Number of brackets Brackets Ranking
    Lowest Highest Lowest Highest
    Ohio 0.528% 5.333% 9 $5,200 $208,000 22
    Illinois 3.8% 3.8% 1 Flat rate 31
    Indiana 3.3% 3.3% 1 Flat rate 32
    Michigan 4.25% 4.25% 1 Flat rate 30
    Wisconsin 4.4% 7.65% 4 $11,090 $244,270 10
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015

    Personal exemptions

    States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation. [9]

    Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions for Ohio and its neighboring states as reported by the Tax Policy Center are reported in the chart below.[10]

    In Ohio, state personal exemptions for single filers were equal to $2,200, which was second highest among its neighbors that allowed for personal income tax exemptions. Exemptions for those filing as a married couple were equal to $4,400 in 2015. Ohio regulations also allow filers to receive exemptions for dependents. These exemptions were equal to about $1,700 in 2015.[11]

    Personal exemptions, 2015
    State Single Married Dependents
    Ohio (a) $2,200 $4,400 $1,700
    Illinois $2,000 $4,000 $2,000
    Indiana $1,000 $2,000 $2,500
    Michigan (a) $3,950 $7,900 $3,950
    Wisconsin (a) $700 $1,400 $700
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015

    Capital gains tax

    See also: Capital gains tax

    A capital gains tax is a tax levied on the profit gleaned from the sale of a capital asset. Examples of capital assets include stocks, businesses, land parcels, homes, personal items and more. Capital gains are taxable at both the federal and state levels. While the federal government taxes capital gains at a lower rate than regular personal income, states usually tax capital gains at the same rates as regular income. In Ohio, the uppermost capital gains tax rate was 5.3 percent. The combined uppermost federal and state tax rates totaled 28.3 percent, ranking 22nd highest in the nation.[12][13][14]

    The table below summarizes uppermost capital gains tax rates for Ohio and neighboring states in 2015.

    Uppermost capital gains tax rates by state, 2015
    State State uppermost rate Combined uppermost rate Ranking
    Ohio 5.30% 28.30% 22
    Illinois 3.80% 27.20% 38
    Indiana 3.40% 27.80% 33
    Michigan 4.30% 27.70% 34
    Wisconsin 7.70% 28.20% 23
    U.S. AVERAGE 28.70%
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "The High Burden of State and Federal Capital Gains Tax Rates," accessed September 29, 2015

    Sales tax

    See also: Sales tax

    Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.5 percent in California. Additionally, many states allow the levying of local sales taxes, which are then added to the state's tax.

    Ohio's state sales tax was 5.75 percent in 2015. The average local tax was about 1.35 percent, meaning that the average combined sales tax was about 7.1 percent. This was the 19th highest combined sales tax in the country in 2015, and was second highest among its neighboring states. The table below displays the state tax rates, average local tax rates, and average combined tax rates for Ohio and its neighboring states.

    Combined sales tax rates, 2015
    State State sales tax Average local sales tax (a) Combined Ranking
    Ohio 5.75% 1.35% 7.10% 19
    Illinois 6.25% 1.94% 8.19% 10
    Indiana 7.00% None 7.00% 21
    Michigan 6.00% None 6.00% 37
    Wisconsin 5.00% 0.43% 5.43% 44
    "(a) City, county, and municipal rates vary. These rates are weighted by population to compute an average local tax rate."
    Source: The Tax Foundation, "State and local sales tax rates, 2015," accessed November 5, 2015

    The sales tax rate in Ohio for tax year 2015 was 5.75 percent. The table below summarizes sales tax rates for Ohio and neighboring states in 2015. The table also notes the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).[15]

    Sales tax rates, 2015
    State Sales tax rate Exemption status
    Food Prescription drugs Nonprescription drugs
    Ohio 5.75% Exempt Exempt Taxable
    Illinois 6.25% 1% 1% 1%
    Indiana 7% Exempt Exempt Taxable
    Michigan 6% Exempt Exempt Taxable
    Wisconsin 5% Exempt Exempt Taxable
    Source: Tax Policy Center, "Sales Tax Rates 2000-2015," accessed September 30, 2015

    Excise taxes

    See also: Excise taxes

    Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer. The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in Ohio and neighboring states. In Ohio, excise tax revenues comprised 18.3 percent of total tax collections in 2013.[16][17][18][19]

    Fuel excise tax rates, 2015 (in cents per gallon)
    State Gasoline Diesel Gasohol
    Excise tax Other taxes Total tax Excise tax Other taxes Total tax Excise tax Other taxes Total tax
    Ohio 28¢ 0¢ 28¢ 28¢ 0¢ 28¢ 28¢ 0¢ 28¢
    Illinois 19¢ 1.1¢ 20.1¢ 21.5¢ 1.1¢ 22.6¢ 19¢ 1.1¢ 20.1¢
    Indiana 18¢ 0¢ 18¢ 16¢ 0¢ 16¢ 18¢ 0¢ 18¢
    Michigan 19¢ 0¢ 19¢ 15¢ 0¢ 15¢ 19¢ 0¢ 19¢
    Wisconsin 30.9¢ 2¢ 32.9¢ 30.9¢ 2¢ 32.9¢ 30.9¢ 2¢ 32.9¢
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "State Motor Fuel Tax Rates 2000-2011, 2013-2015," accessed September 30, 2015
    Alcohol excise tax rates, 2015 (in dollars per gallon)
    State Liquor Wine Beer
    Tax rate Does general sales tax apply? Tax rate Does general sales tax apply? Tax rate Does general sales tax apply?
    Ohio See footnote1 Yes $0.32 Yes $0.18 Yes
    Illinois $8.55 Yes $1.39 Yes $0.23 Yes
    Indiana $2.68 Yes $0.47 Yes $0.12 Yes
    Michigan See footnote1 Yes $0.51 Yes $0.20 Yes
    Wisconsin $3.25 Yes $0.25 Yes $0.06 Yes
    1"In 17 states, the government directly controls the sales of distilled spirits. Revenue in these states is generated from various taxes, fees, price mark-ups, and net liquor profits."
    2"General sales tax applies to on-premise sales only."
    3"Rhode Island tax rate scheduled to decrease to $3.75 on July 1, 2015."
    4"Washington privatized liquor sales effective June 1, 2012."
    5"All wine sales are through state stores. Revenue in these states is generated from various taxes, fes, price mark-ups, and net profits."
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "Alcohol Rates, 2000-2010, 2013-2015," accessed September 30, 2015
    State cigarette taxes, 2015 (in cents per pack)
    State Tax rate National ranking
    Ohio 125¢ 29
    Illinois 198¢ 17
    Indiana 99.5¢ 32
    Michigan 200¢ 12
    Wisconsin 252¢ 10
    Note: For full annotations, see the source below.
    Source: Tax Policy Center, "State Cigarette Taxes, 2015," accessed September 30, 2015

    Corporate income tax

    See also: Corporate income tax

    Ohio does not levy a corporate income tax on most corporations. The table below compares the corporate income tax rates of some of its neighboring states.[20][21]

    Corporate income tax rates, 2015
    State Tax rate Brackets Number of brackets
    Lowest Highest
    Ohio N/A
    Illinois 7.75% Flat rate 1
    Indiana 7% Flat rate 1
    Michigan 6% Flat rate 1
    Wisconsin 7.9% Flat rate 1
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2015," accessed October 7, 2015

    Business tax climate

    In October 2014, the Tax Foundation released a report evaluating business tax systems in the states for fiscal year 2015. The report's authors graded the states by analyzing more than 100 variables in five general tax areas: corporate taxes, personal income taxes, sales taxes, unemployment insurance taxes and property taxes. States were scored on a scale of zero to 10, with a score of zero indicating the worst business tax structure and a score of 10 indicating the best. States were then ranked on a scale of one to 50, with a ranking of one indicating the state with the best business tax climate and a score of 50 indicating the state with the worst.[22]

    In fiscal year 2015, Ohio's business tax climate was ranked 42nd in the nation. The table below provides scores and rankings for Ohio and neighboring states. To access the full report, click here.[22]

    Business tax climate rankings, fiscal year 2015
    State 2014 2015 Change from 2014 to 2015
    Rank Score Rank Score Rank Score
    Ohio 42 4.45 44 4.41 -2 -0.04
    Illinois 29 5 31 4.96 -2 -0.04
    Indiana 8 5.99 8 5.96 0 -0.03
    Michigan 13 5.74 13 5.64 0 -0.1
    Wisconsin 43 4.42 43 4.46 0 0.04
    Note: For complete notes and annotations, please see the source below.
    Source: Tax Foundation, "2015 State Business Tax Climate Index," October 28, 2014

    Property tax

    See also: Property tax

    Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property taxes, including tabulation methods, see this page.[23][24][25]

    Property taxes comprise the lion's share of local government revenues. In 2010, property taxes accounted for 75 percent of the tax revenues collected by local government entities (such as cities, counties, school districts, etc.). States, on the other hand, generate very little revenue from property taxes. Property tax rates can vary substantially from locality to locality within a state.[23][24]

    The table below provides the mean amount of property taxes paid, as well as property tax as a mean percentage of home value, for Ohio and neighboring states for 2012. In terms of mean property taxes paid, Ohio ranked second lowest when compared to neighboring states.[23]

    Mean property taxes paid per state, 2012
    State Mean property taxes paid Property tax as a percent of home value
    Ohio $2,327 1.77%
    Illinois $4,469 2.28%
    Indiana $1,200 0.93%
    Michigan $2,347 2.06%
    Wisconsin $3,530 2.07%
    Source: Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013

    The table below lists per capita state and local property tax collections for Ohio and neighboring states for fiscal year 2012. According to the Tax Foundation, which compiled the data below, Ohio ranked 30th in the country in terms of property tax collections per capita.[26]

    State and local property tax collections per capita, 2012
    State Collections per capita Ranking
    Ohio $1,174 30
    Illinois $1,985 11
    Indiana $994 36
    Michigan $1,344 25
    Wisconsin $1,758 13
    Source: Tax Foundation, "Facts and Figures 2015: How Does Your State Compare?" accessed October 5, 2015

    Estate and inheritance taxes

    See also: Estate and inheritance taxes

    Ohio does not levy any estate or inheritance taxes, although residents are subject to the federal estate tax.[27]

    Tax revenues

    Tax collections by source as a percentage of total tax collections in 2013.
    See also: Ohio state budget and finances

    The table below summarizes general fund revenue sources for Ohio and neighboring states in 2013. All figures are rendered in millions of dollars (for example, $1,500 translates to $1,500,000,000). Per capita figures have not been abbreviated.[28]

    General fund revenue sources, 2013
    State Sales tax Personal income tax Corporate income tax Other taxes and fees Grand total Per capita revenues
    Ohio $8,445 $9,508 $262 $11,344 $29,559 $2,554.62
    Illinois $7,335 $16,630 $3,086 $9,239 $36,290 $2,817.08
    Indiana $6,796 $4,978 $968 $1,720 $14,462 $2,200.92
    Michigan $1,832 $5,844 $438 $1,075 $9,189 $928.59
    Wisconsin $4,410 $7,497 $925 $1,254 $14,086 $2,554.62
    Source: National Association of State Budget Officers, "State Expenditure Report: Examining Fiscal 2011-2013 State Spending," accessed September 24, 2014

    The table below lists tax collections by source as a percentage of total collections for Ohio and neighboring states in 2013.[3]

    Tax collections by source as a percentage of total tax collections, 2013
    State Property tax Sales tax Select sales (excise) taxes Personal income tax Corporate income tax Other taxes
    Ohio 0% 31.6% 18.3% 36.1% 1% 13%
    Illinois 0.2% 21.1% 16.9% 42.7% 11.5% 7.6%
    Indiana 0% 40.1% 20.7% 29.4% 4.6% 5.1%
    Michigan 7.8% 33.6% 15.3% 32.8% 3.6% 6.9%
    Wisconsin 0.9% 26.7% 16.2% 43.7% 5.8% 6.7%
    Source: Tax Policy Center, "State Tax Collection Shares by Type 2000-2013," June 20, 2014

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 Federation of Tax Administrators, "2014 State Tax Revenue," accessed October 26, 2015
    2. ↑ Constitution of the State of Ohio, "Article XII," accessed October 17, 2014
    3. ↑ 3.0 3.1 Tax Policy Center, "State Tax Collection Shares by Type 2000-2013," June 20, 2014
    4. ↑ Brunori, D. (2011). State Tax Policy: A Political Perspective. Washington, D.C.: The Urban Institute Press
    5. ↑ Federation of Tax Administrators, "2014 State Tax Revenue," accessed October 26, 2015
    6. ↑ Investing Answers, "Tax Bracket," accessed September 24, 2014
    7. ↑ 7.0 7.1 Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015
    8. ↑ Tax Foundation, "State Personal Income Tax Rates and Brackets 2014 Update," March 21, 2014
    9. ↑ Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
    10. ↑ Internal Revenue Service, "3. Personal Exemptions and Dependents," accessed December 14, 2015
    11. ↑ Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
    12. ↑ Internal Revenue Service, "Topic 409 - Capital Gains and Losses," August 19, 2014
    13. ↑ Tax Foundation, "The High Burden of State and Federal Capital Gains Tax Rates," February 11, 2014
    14. ↑ Tax Policy Center, "Capital Gains and Dividends: How are capital gains taxed?" June 22, 2011
    15. ↑ Tax Policy Center, "Sales Tax Rates 2000-2015," accessed October 2, 2015
    16. ↑ Tax Policy Center, "Excise taxes," accessed October 20, 2014
    17. ↑ Investopedia, "Excise Tax," accessed October 20, 2014
    18. ↑ Tax Foundation, "Excise Taxes," accessed October 20, 2014
    19. ↑ Internal Revenue Service, "Excise Tax," accessed October 20, 2014
    20. ↑ Investopedia, "Corporate Tax," accessed September 24, 2014
    21. ↑ Tax Foundation, "State Corporate Income Tax Rates and Brackets for 2015," accessed October 7, 2015
    22. ↑ 22.0 22.1 Tax Foundation, "2015 State Business Tax Climate Index," October 28, 2014
    23. ↑ 23.0 23.1 23.2 Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013
    24. ↑ 24.0 24.1 Bankrate, "Property taxes explained," February 3, 2000
    25. ↑ Investopedia, "Property Tax," accessed September 26, 2014
    26. ↑ Tax Foundation, "Facts and Figures 2015: How Does Your State Compare?" accessed October 5, 2015
    27. ↑ Tax Foundation, "State Estate and Inheritance Taxes in 2014," May 28, 2014
    28. ↑ National Association of State Budget Officers, "State Expenditure Report: Examining Fiscal 2011-2013 State Spending," accessed September 24, 2014
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