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Ohio payroll taxes
Here’s what you need to know about withholding payroll taxes in Ohio.
- Ohio payroll taxes start with employees filling out Ohio IT 4 FORM. This information helps you determine how much you should withhold.
- If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.
- Ohio’s personal income tax uses a progressive tax system with the top rate at 3.99%.
- Ohio has reciprocity with the following states: Indiana, Kentucky, Michigan, Pennsylvania, West Virginia.
In addition to the forms mentioned above, Ohio employers also need to file the following forms:
- IT 501 Payment of Income Tax Withheld: This form is not required to be filed if there was no requirement for Ohio income tax to be withheld.
- IT 941 Annual Reconciliation of Income Tax Withheld: This is filed by employers with a monthly or quarterly filing frequency.
- IT 942 Quarterly Reconciliation of Income Tax Withheld: This is only filed by employers with a partial-weekly filing frequency specifically for 1st, 2nd, and 3rd quarter withholding payments.
- IT 942 Quarter/Annual Reconciliation of Income Tax Withheld: This is also only filed by employers with a partial-weekly filing frequency and is for the 4th quarter and the entire calendar year.
- IT 3 Transmittal of Wage and Tax Statements & W-2s or 1099-Rs: This is how you submit your W-2s and 1099-Rs to Ohio. They strongly encourage employers to submit these electronically.
Ohio unemployment tax rate
Ohio requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own.
- Employers pay state unemployment tax on the first $9,000 of an employee’s wages.
- New employers in the construction industry pay at a rate of 5.6%.
- New employers who are not in the construction industry pay at a rate of 2.7%.
- Experienced employers pay at a rate of 0.3%–9.8%.
- Unemployment tax in Ohio should be paid quarterly online.
Paying Ohio taxes
Here’s what you need to know about paying Ohio taxes:
- How often employers pay depends on the amount of tax you withhold in a year.
- Ohio’s payment frequencies are: Quarterly
Other Ohio taxes
Ohio employers are also required to pay or withhold the following taxes.
- School District Taxes: These are due quarterly. Here is the list of cities in Ohio that assess a school district tax.
- Municipal Payroll Taxes: These are due quarterly; here are the 2023 ax rates
- RITA (Regional Income Tax Agency): These are due quarterly; here are the 2023 tax rates.
Ohio minimum wage
In 2023, the minimum wage in Ohio is $10.10 per hour for non-tipped employees, and $5.05 for tipped employees plus tips.
Local minimum wage
The following municipalities have minimum wage rules:
- Columbus, Ohio: $10.10 per hour for non-tipped employees, and $5.05 for tipped employees plus tips.
Ohio overtime pay
Because Ohio doesn’t have any Ohio law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.
Requirements to obtain Workers’ Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Employers in Ohio need to report new employees.
- New hires must be reported to the Ohio Directory of New Hires.
- New hires must be reported within 20 days of their first day of work.
You must provide a pay stub to every employee that includes:
- Company’s legal name and address
- Employee’s name and last four digits of their Social Security number
- Pay period beginning and end dates
- Total hours worked
- Rate of pay
- Gross wages
- The amount and reason for any deduction
Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.
- If a worker voluntarily resigns, final wages are due on the first day of the month for wages that were earned in the first half of the previous month, or on the 15th day of the month for wages earned in the second half of the previous month.
- For layoffs and involuntary terminations of employment, final wages are due on the first day of the month for wages that were earned in the first half of the previous month, or on the 15th day of the month for wages earned in the second half of the previous month.
Employers must provide the following types of time off to employees:
- Jury duty
- Voting leave
Family & parental leave (FMLA)
Federal payroll taxes
In addition to state-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.
Federal income tax
Unless they are exempt, your employees will pay federal income tax.
- You must withhold federal income tax from employees’ pay, unless they are exempt.
- Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
- Form W-4 does not need to be sent to the IRS, but should be kept for your records.
Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.
- FICA is made up of the Medicare tax and the Social Security tax.
- In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages. In 2023, the wage base for this tax is $160,200.
- The Medicare tax requires employers and employees to each contribute 1.45% of all wages.
- See the IRS webpage for details, like maximum thresholds.
Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.
- FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages.
- The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.
- Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly.
Additional Medicare tax
The Additional Medicare tax is paid by employees. Here’s what you should know:
- For employees who earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax.
- Whether or not your employee owes this tax may depend on their filing status.
Paying federal taxes
How often you’ll pay federal payroll taxes depends on how much you owe.
- Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.
- Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
We’re here to help
If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.