Ohio Tax Overview

When you locate in Ohio, you'll build a profitable business.

A business-friendly tax environment is an absolute must in today’s economy. In Ohio, we’re doing something about it.

Ohio has:

  • No corporate profits tax and no inventory tax
  • No tangible personal property tax
  • No tax on gross receipts under $1 million
  • No tax on machinery and equipment investments

And the state’s Commercial Activity Tax is a low .26% on gross receipts exceeding $1 million.

Ohio’s tax on new investment the lowest in the Midwest, and Ernst & Young research shows that our 4.4% effective rate ranks Ohio as the third friendliest tax environment in the nation.

Ohio has a business-minded governor who understands the realities of a competitive market. Paying taxes is the responsibility of every business — it helps strengthen our people and our state. But it shouldn’t prevent entrepreneurs and established business alike from doing what they do best.

Fact 1
Ohio won’t tax your profits.

We’ve eliminated corporate income and franchise taxes. Zero tax on corporate income means reduced operating costs and enhanced profit margins for your business.

Fact 2
No taxes on new machinery and equipment.

We want your profits to soar, so when you invest in greater productivity, your business will have zero tax liability surrounding that investment.

Fact 3
Zero-tax burden on inventory.

Operating costs can drop significantly as a result of Ohio’s inventory tax policy. If your business holds inventory in Ohio, it’s completely tax free.

Fact 4
Don’t pay tax on out-of-state sales.

Ohio doesn’t impose a tax on goods or services sold outside of our state. If you ship 100% of your product outside of Ohio, your Commercial Activity Tax (CAT) is zero.

Fact 5
Start a business, get huge benefits.

Entrepreneurs will love this: Your first $1 million in gross receipts can be tax-free in Ohio.

Fact 6
Our flat tax is easier.

Flat tax paid if your sales are between $150,000 and $1 million.

Read More And Compare
A new report by the Quantitative Economics and Statistics Practices (QUEST) of Ernst & Young in conjunction with the Council On State Taxation (COST), ranks Ohio as third in the nation for friendliest tax environment. The study, “Competitiveness of state and local business taxes on new investment,” provides a state-by-state comparison of tax liabilities. Download the full report.

The top five states ranked with the lowest effective tax rate on new investment are: (1) Maine (3.0%); (2) Oregon (3.8%); (3) Ohio (4.4%); (4) Wisconsin (4.5%); and (5) Illinois (4.6%). The highest ETRs on new investment are found in: (1) New Mexico (16.6%); (2) District of Columbia (16.6%); (3) Rhode Island (11.5%); (4) Kansas (11.2%); and (5) Louisiana (11.1%).

NOTES

Data Source: jobs-ohio.com/why=ohio/economic-business-climate/.

Total State and Local Sales Tax Rates, by County

sales tax rates graphic

State and permissive sales tax rates by county. (pdf 76 KB)