Ohio 2026 Tax Update: 0% to 2.75% Flat Nonbusiness Rate

(OHIO) Ohio is set to move to a single flat income tax rate in 2026, a change that will affect many immigrants and international workers who earn W-2 wages in the state. Under the new structure, Ohio will tax nonbusiness income at 0% up to $26,050, and then apply a 2.75% rate to every dollar above that threshold. Income at or below $26,050 remains untaxed.

For newcomers weighing where to live and work in the United States 🇺🇸, state tax bills can shape take-home pay like rent, health insurance, and child care. Ohio’s move also matters to employers who recruit foreign talent, because payroll withholding and “net pay” offers are often discussed during visa hiring and relocation.

2026: Flat-rate system replaces 2025 brackets

For tax year 2026, Ohio will no longer use the three-bracket setup in place for 2025. In 2025, the state had rates of 0%, 2.75%, and 3.125%. In 2026, the system becomes:

• 0% on income from $0 to $26,050
• 2.75% on all nonbusiness income over $26,050

Because the top 2025 rate was 3.125%, many wage earners who previously paid that top marginal rate will see a lower state tax rate on the portion of their income above the threshold. Others who already fell into the 2.75% bracket may see less change, though the single-rate design can make planning simpler.

Quick comparison: 2025 vs 2026 (personal/nonbusiness income)

Why this matters for immigrants and visa holders paid on W-2s

Most immigrants in Ohio who work for an employer—think H-1B professionals, L-1 intracompany transferees, TN workers, O-1 artists, or F-1 students on OPT—receive a Form W-2. The state describes the 2026 reduction as applying to nonbusiness income, which includes most W-2 wages.

That means the new flat income tax rate is most relevant to people whose income comes mainly from:

• Salaries
• Hourly pay
• Bonuses
• Other employer-paid compensation

It can also matter to spouses on work-authorized statuses, including some H-4 and L-2 spouses, and to new permanent residents who start jobs soon after arriving.

For many immigrant families, state tax costs also link to practical issues like sending money home, saving for adjustment of status filing fees, or paying for credential evaluation and licensing. A lower rate does not solve those challenges, but it can change monthly cash flow.

Important: The 2026 change applies to nonbusiness income (mostly W-2 wages). If you run a business or contract, different rules may apply.

The business-income carve-out: who it affects

Ohio is not moving all personal income to 2.75%. The source material notes that business income continues to be taxed at a flat rate of 3.0%, and that the first $250,000 of business income remains exempt.

This split treatment matters to:

• Immigrants who run side businesses
• Independent contractors
• Owners of pass-through entities
• People transitioning from employee work to self-employment after receiving an Employment Authorization Document
• Individuals moving from an employer-tied visa to a more flexible status

In practice, a worker could have both categories in the same year: W-2 pay treated as nonbusiness income and separate business profit taxed under the 3.0% rule. People in that situation often need careful bookkeeping to separate wage income from business income when filing.

Comparing Ohio’s 2.75% with other states during relocation talks

The new setup puts Ohio among the lowest flat-tax states. The source material says Ohio’s flat tax will be the second lowest in the nation—behind only Arizona’s 2.5% rate.

When immigrants compare job offers across states, this often factors into discussions—especially when salaries look similar on paper. However, remember:

• State income tax is only one piece of the puzzle.
• Local taxes, property taxes, and cost of living can offset a lower state rate.
• Access to airports, language communities, schools, and family considerations often weigh as heavily as taxes.

According to analysis by VisaVerge.com, immigration decisions are rarely driven by one factor like taxes; people weigh time to permanent residency, job stability, and family needs alongside pay and benefits.

Planning points: withholding, residency, and common adjustments

Ohio does not have its own standard deduction, but it does allow specific adjustments to income for military members, education expenses, medical costs, and contributions to certain Ohio state-sponsored investment plans, based on the source material.

A few common planning issues for immigrants:

• Payroll withholding
  • If Ohio withholding tables are updated for 2026 to reflect the new 2.75% structure, employees may notice higher net pay per paycheck compared with a year that included the 3.125% bracket.
  • If too much is withheld, you get a refund later; if too little is withheld, a balance may be due at filing.
• Resident vs. nonresident questions
  • Many international workers move mid-year. Your Ohio residency status affects what income Ohio can tax.
  • Keep records of move dates, lease agreements, and work locations.
• Tax treaties and federal rules
  • State income tax does not automatically follow U.S. tax treaty benefits. Some treaty exclusions that reduce federal taxable wages may not apply the same way at the state level.

For official details and updates, the most reliable starting point is the Ohio Department of Taxation’s individual income tax overview: https://tax.ohio.gov/individual, which posts guidance on rules, rates, and filing.

What to watch as 2026 approaches

The new flat income tax rate is straightforward on paper, but its day-to-day effect depends on:

• How your income is split between nonbusiness income and business income
• How your employer sets withholding
• Your residency status and filing choices

International employees should confirm personal data—name format, Social Security number or ITIN, and address—so W-2 forms and state filings match federal records.

Immigrants who expect big changes in 2026—such as switching employers after a visa transfer, starting a side business, or moving into Ohio from another state—may want to estimate their state tax early. This is especially true for households where:

• One spouse has W-2 wages and the other has business income, because different rates and exemptions can change the final bill.

Key takeaway: Review withholding, track income types carefully, and consider early estimates if you expect major employment or residency changes in 2026.