Ohio State Income Tax Rates and Brackets for 2025 Explained

Key Takeaways

• Ohio lowers top income tax rate to 3.125% for 2025; full flat tax at 2.75% starts in 2026.
• The 2025 system has three brackets; 2026 introduces a flat tax on income above $26,050.
• Employers must update payrolls; taxpayers should check withholding and plan for new tax rules.

Ohio is making a major change to its state income tax system, and this update will affect nearly every taxpayer living or working in the state. As of July 10, 2025, Ohio is moving away from its old system with several tax brackets and different rates, and is preparing to switch to a flat tax system. This update explains exactly what is changing, who will feel the effects, when the new rules start, what actions people need to take, and what these changes mean for anyone with pending tax matters or planning for the future.

Summary of What Changed

For the 2025 tax year, Ohio is in a transition period. The state has lowered its top income tax rate and adjusted the brackets, but it still uses a system with different rates for different income levels. Starting January 1, 2026, Ohio will fully move to a flat tax system. This means everyone who earns more than a certain amount will pay the same percentage of their income in state income tax, no matter how much they make.

Key Changes for 2025:
– Lower top tax rate: The highest tax rate drops from 3.5% to 3.125%.
– Three brackets remain: There are still three tax rates, but the brackets have shifted.
– Transition year: 2025 is a bridge between the old system and the new flat tax.

Key Changes for 2026 and Beyond:
– Flat tax rate: Everyone pays 2.75% on income above $26,050.
– No more brackets: The tax system becomes much simpler, with only one rate for most people.

Who Is Affected by the Changes?

Almost every person who earns income in Ohio will be affected by these changes. This includes:
– Residents of Ohio: Anyone who lives in Ohio and earns income will need to follow the new rules.
– Non-residents who work in Ohio: People who live in another state but work in Ohio will also be taxed under the new system.
– Employers: Businesses must update their payroll systems to use the new withholding rates.
– Tax preparers and accountants: Professionals who help others file taxes need to understand the new rules to give correct advice.

Effective Dates

• 2025 Tax Year: The new transitional rates and brackets apply to income earned in 2025, which will be reported on tax returns filed in 2026.
• 2026 Tax Year and Beyond: The flat tax system starts with income earned on or after January 1, 2026.

Ohio State Income Tax Rates and Brackets for 2025

For the 2025 tax year, Ohio uses the following rates and brackets for taxable nonbusiness income:

• 0% tax rate: For income from $0 to $26,050. No state income tax is owed on this amount.
• 2.75% tax rate: For income from $26,051 to $100,000. Tax owed is $360.69 plus 2.75% of the amount over $26,050.
• 3.125% tax rate: For income over $100,000. Tax owed is $2,394.32 plus 3.125% of the amount over $100,000.

Example Calculations:
– If you earn $30,000 in taxable income, you pay $360.69 plus 2.75% of $3,950 (the amount over $26,050).
– If you earn $120,000, you pay $2,394.32 plus 3.125% of $20,000 (the amount over $100,000).

Transition to Flat Tax in 2026

Starting January 1, 2026, Ohio will have a flat tax rate for most taxpayers. The new rule is simple:

• Flat 2.75% tax rate: All taxable income above $26,050 is taxed at 2.75%.
• Tax calculation: Tax owed = $332.00 plus 2.75% of the amount over $26,050.

This means that whether you earn $30,000 or $300,000, you will pay the same percentage on your income above the $26,050 threshold.

Why Is Ohio Making This Change?

The move to a flat tax is part of Ohio’s biennial operating budget, signed by Governor Mike DeWine on June 30, 2025. The main goals are:
– Simplify the tax system: Fewer brackets and a single rate make it easier for people to figure out how much they owe.
– Lower the tax burden for higher earners: People with higher incomes will see a bigger drop in their tax bills.
– Encourage economic growth: Lawmakers believe that lower taxes for higher earners and a simpler system will help attract businesses and workers to Ohio.

What Do Taxpayers Need to Do?

For 2025:
– Check your withholding: Employers have updated payroll systems to use the new rates. Make sure your paycheck reflects the correct amount of state income tax being withheld.
– Plan for your tax bill: If you are used to the old rates, your tax bill may be lower, especially if you earn more than $100,000. But you should still check to make sure you are not under- or over-withholding.
– File on time: The deadline for filing your 2025 Ohio state income tax return (for income earned in 2024) is April 15, 2025. There is no extension for payment deadlines.

For 2026 and Beyond:
– Understand the new flat tax: Starting with income earned in 2026, you will only need to know one tax rate for most income.
– Adjust your tax planning: If you do your own taxes or use a tax preparer, make sure you use the new flat tax rules.
– Employers: Update payroll systems again to reflect the flat tax rate for 2026.

Implications for Pending Applications and Tax Planning

If you have pending tax matters, such as amended returns or payment plans, these changes may affect you:
– Amended returns for earlier years: These will still use the old tax rates and brackets.
– Payment plans: If you are paying off taxes owed from earlier years, your payments will not change, but future tax bills may be lower.
– Estimated payments: If you pay estimated taxes, use the new rates for 2025 and the flat rate for 2026.

How Does This Affect Different Groups?

Lower-Income Taxpayers:
– The 0% tax bracket up to $26,050 stays the same. This means people who earn less than this amount will not owe any state income tax.
– For those just above the threshold, the new rates are slightly lower than before.

Middle-Income Taxpayers:
– Most people in this group will see a small reduction in their tax rate for 2025 and a further drop in 2026.
– The flat tax system will make it easier to figure out how much tax is owed.

Higher-Income Taxpayers:
– The biggest benefit goes to people earning over $100,000, who will see their top tax rate drop from 3.5% to 3.125% in 2025, and then to 2.75% in 2026.
– This group will save the most money under the new system.

Employers:
– Employers must update their payroll systems twice: once for the 2025 transitional rates, and again for the 2026 flat tax.
– Correct withholding is important to avoid problems for employees at tax time.

Tax Preparers and Accountants:
– Professionals need to stay up to date on the new rules to give accurate advice.
– The flat tax system will make tax preparation simpler, but the transition year may cause confusion.

Expert Perspectives

Tax experts like Melissa Zetts point out that the move to a flat tax is a big change for Ohio. She notes that while the new system is simpler, it also means that everyone pays the same rate, no matter how much they earn. This is different from the old system, where higher earners paid a higher percentage.

According to analysis by VisaVerge.com, the new flat tax is expected to save Ohio taxpayers more than $1 billion over the next two years. Most of these savings will go to people with higher incomes. Some experts warn that while the system is easier to use, it may not be as fair to lower- and middle-income taxpayers, since the tax is less “progressive.” In a progressive system, people who earn more pay a higher percentage, which can help balance the tax burden.

Business Income Remains Separate

It is important to note that business income is not affected by these changes. Business income in Ohio continues to be taxed at a flat rate of 3%. This rate has not changed as of 2025. If you have both personal and business income, you will need to calculate your taxes separately for each type.

Filing Deadlines and Forms

• The deadline for filing Ohio state income tax returns for the 2024 tax year (filed in 2025) is April 15, 2025.
• There is no extension for payment deadlines, so make sure to pay any taxes owed by this date to avoid penalties.
• For the latest forms, instructions, and withholding tables, visit the Ohio Department of Taxation official website.

Summary Table: Ohio State Income Tax Rates

What Should You Do Next?

• Review your income: Check if your income falls into a different bracket for 2025, and see how much you might save.
• Update your withholding: Make sure your employer is using the correct rates for 2025, and be ready for another change in 2026.
• Plan for the future: If you expect your income to change, think about how the flat tax will affect your tax bill in 2026 and beyond.
• Consult a professional: If you are unsure how these changes affect you, talk to a tax preparer or accountant.

Where to Get More Information

For the most up-to-date information, including forms and detailed instructions, visit the Ohio Department of Taxation website. You can also call Ohio Taxpayer Assistance at 1-800-282-1780 for help with specific questions.

Conclusion

Ohio’s move to a flat state income tax is a big change that will affect how much you pay and how you plan your finances. For 2025, you will see lower rates and a simpler system, but you still need to pay attention to which bracket you fall into. Starting in 2026, the flat tax will make things even simpler, but it also means everyone pays the same rate on income above $26,050. Make sure you understand the new rules, check your withholding, and plan ahead so you are not caught off guard when it is time to file your taxes.

If you have questions or need help, reach out to the Ohio Department of Taxation or a trusted tax professional. Staying informed will help you make the best decisions for your situation as Ohio’s tax system changes.

As reported by VisaVerge.com, these changes are part of a larger effort to make Ohio more competitive and attractive for workers and businesses, but it is important for every taxpayer to understand how the new rules will affect them personally. By taking the right steps now, you can make sure you are ready for the new Ohio state income tax system in 2025 and beyond.

Learn Today

Flat tax → A single tax rate applied uniformly to all taxable income above a specific threshold.
Tax bracket → An income range taxed at a specific rate, used to calculate varying tax amounts.
Withholding → The portion of income employers deduct from paychecks for state tax payments on employees’ behalf.
Estimated payments → Advance tax payments taxpayers make periodically before filing annual returns to cover owed taxes.
Progressive tax → A tax system where higher incomes are taxed at increasing rates to balance tax burden fairly.

This Article in a Nutshell

Ohio transitions to a simpler tax system by 2026, introducing a flat 2.75% rate above $26,050, benefiting higher earners with lower rates and easing tax preparation for residents and non-residents alike.
— By VisaVerge.com