Ohio Salary Paycheck Calculator
Ohio has some of the tallest roller coasters in the world, and you might feel like you’re on a big rollercoaster ride as you navigate state and federal payroll taxes, too. If you’re processing your Ohio payroll in-house, we’ll cover the key state and federal payroll taxes and paycheck laws you’ll need to master. Qualified accountants are always available to help if you need a pro.
Ohio Payroll Taxes
Do I have to withhold state income taxes in Ohio?
Generally, yes. Ohio requires every employer that pays employees and maintains an office or does business within Ohio to withhold income tax. However, there is a detailed and specific list of exceptions based on things like types of labor, the amount paid, and an employee’s residency. Check out Ohio’s Tax Filing Guidelines for the complete list of exceptions.
Employees should complete the IT 4, Employee’s Withholding Exemption Certificate. Using the information form and Ohio’s tax tables, you can determine how much tax to withhold. If an employee doesn’t provide a Certificate, you’ll withhold tax as if they have no exemptions.
You won’t have to withhold income tax for employees who reside in Michigan, Indiana, Kentucky, West Virginia, or Pennsylvania.
How do I pay the withholding tax to Ohio?
Depending on your filing frequency, which is determined by the amount of tax withheld, you’ll file quarterly, monthly, or partial weekly. But you won’t have to file if you weren’t required to withhold any tax.
Also, depending on your filing frequency, you’ll also have to file summary reports monthly, quarterly, or annually.
What is Ohio’s unemployment tax?
Ohio’s unemployment tax rates for 2022 range from 0.3% to 12.8%, depending on details like the amount of benefits paid to your former employees and total wages paid. The 2022 unemployment tax rate includes a 0.5% mutualized rate, which has been tacked on due to the effect of the COVID-19 pandemic on the unemployment fund.
The new employer rate for 2022 is 2.7% of the first $9,000 of an employee’s wages, unless your company is in the construction industry, in which case the rate is higher.
What if my company operates in Cincinnati?
If your business operates in Cincinnati, there is a city-specific tax to know about. Individuals who live and/or work in Cincinnati are subject to the 1.8% Cincinnati Income Tax. You should keep in mind that this tax is required to be paid by wage earners regardless of age or level of income. It must be paid to the City of Cincinnati, not the state of Ohio.
Are there other local taxes in Ohio?
Yes. You need to know about RITA (Regional Income Tax Agency). Some cities outsource their tax collection to third-party tax collectors. If you will be paying income tax in a local municipality administered by the RITA, you must register your business with the tax collector. Registration is available online. Check the Ohio Local Tax Finder to find municipal tax requirements for any address in Ohio.
What else should I know about Ohio payroll laws?
Here are a few essential tax items to keep in mind.
- Salary threshold: Because the state of Ohio doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
- New Hires: New hires must be reported to the Ohio New Hire Reporting Center within 20 days of the hire date. This is also required for independent contractors.
- School District Taxes: If you have employees residing in school districts with a school district income tax, you need to withhold this tax from their pay.
- Holiday, Vacation, and Sick Time: Employers do not have to pay holiday, vacation, or sick time in Ohio.
- Workers’ Compensation: 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.
- Paychecks: All employees must be paid at least twice per month.
What about federal payroll taxes?
Regardless of your affiliation with the Buckeyes, you will find no respite from Federal taxes. Let’s dig into the four taxes that you’ll need to be aware of:
- Federal income tax (FIT)
- The Federal Insurance Contributions Act (FICA)
- Additional Medicare tax
- The Federal Unemployment Tax Act (FUTA)
Unless an employee is exempt from paying FIT, you’ll need to withhold federal income taxes and submit them to the IRS. You must obtain a Form W-4 from each employee to calculate the proper withholding amount, which will be based on that employee’s wages, filing status, dependents, and potentially other variables.
Keep Form W-4s in your payroll files. Don’t send them to the IRS. Learn more about how employees fill out Form W-4.
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
Depending on how much tax you owe, you may have to pay FICA, Additional Medicare tax, and federal income tax withholding monthly or semi-weekly. Also, quarterly summary reports are due using Form 941.
Additional Medicare Tax
Employers will need to withhold 0.9% Additional Medicare tax for any employee with wages over $200,000. The individual employee may or may not have to pay this tax dependent upon their tax circumstances, but it must be withheld.
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but any employers only have to pay 0.6% each year.
Most businesses will file an annual summary report on Form 940 and pay the FUTA tax. Companies that owe $500 for more will have to pay quarterly.
If you don’t want to do this on your own, Gusto’s full-service payroll allows you to process payroll in minutes.