Withholding Taxes: Ohio

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Ohio employers must withhold state income tax from the pay of employees who are Ohio residents. For employees who are Ohio residents but work in another state, the employer must withhold for the other state's taxes, unless the other state does not require withholding. Withholding is required on work performed by a nonresident within Ohio, unless a reciprocal agreement is in effect with the nonresident's state of residence, or the nonresident is considered a short-term business traveler or a disaster response employee. Ohio has reciprocal agreements with Indiana, Kentucky, Michigan, Pennsylvania and West Virginia. Expatriates are subject to withholding on foreign earned income. See Withholding on Residents, Nonresidents and Expatriates.
• Form IT 4 is used by employers to determine the number of exemptions that employees are entitled to claim and how much Ohio income tax to withhold from their pay. See Employee Withholding Forms.
• Employers must withhold on supplemental wages at a flat rate of at least 3.5%. See Supplemental Wages.
• Ohio employers must give all employees two copies of Form IT-2, or federal Form W-2, Wage and Tax Statement, to report the amount of wages paid and tax withheld in the previous year, by January 31 of the following calendar year. See Form W-2 Reporting Requirements.
• Ohio employers must maintain records of all employees from whom tax was withheld and keep them available for inspection during regular business hours. See Recordkeeping Requirements.
• Localities including Canton, Cincinnati, and well over 600 additional localities (cities and villages) require income tax withholding. See Local Requirements.