Ohio Hourly Paycheck Calculator
Check out our helpful answers to some otherwise confusing payroll tax topics and frequently asked questions about Ohio payroll processing.
Ohio payroll taxes
Does Ohio have income tax at the personal level?
Answer: Yes. Ohio’s personal income tax uses a progressive tax system with the top rate at 3.99% for 2022.
What’s a progressive tax? Progressive tax systems increase the tax rate as income increases.
How do I know how much to withhold from my employees’ paychecks?
You will have the proper variable inputs by ensuring your employees fill out an Ohio IT 4 (this is the state’s version of a Form W-4, which is needed for federal income taxes—see below for more information on this). This is the Ohio Employee’s Withholding Exemption Certificate.
This form will allow your employees to inform you of applicable exemptions and withholding preferences, in turn allowing you to calculate the proper withholding amount.
If a particular employee does not submit a form, you will simply withhold it as if there are no exemptions.
What if one of my employees works remotely or out of state?
Answer: Chances are, if your industry is capable of working remotely, then you have a few employees that may not even live in Ohio.
It is important to note that prior to 2020, you would have had that particular employee fill out an Ohio IT 4 NR (the “NR” stands for Non-Resident). Now, the Ohio IT 4 has been revised to allow non-residents to use the same form.
Though this particular employee may not owe any tax to Ohio, that is their responsibility to determine. They should still use this form to inform you of exemptions and preferences. And Ohio expressly states that employees residing in the following states don’t need to have income tax withheld:
- West Virginia
What tax forms do I need to file as an employer?
Answer: There are several forms you will need to file. You can see the details regarding these forms at the Ohio Department of Taxation website, but we’ve broken them down for a quick overview.
- 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.
What is the minimum wage for Ohio?
|Minimum Wage in Ohio for 2022|
|Non-tipped employees||$9.30 per hour|
|Tipped employees||$4.65 per hour|
Also, be aware that you must report new hires to the Ohio Directory of New Hires within 20 days of the hire date. This is also required for independent contractors.
What do I need to know about unemployment tax in Ohio?
Answer: There is an unemployment insurance tax in Ohio. There are some nuances and a decent amount of depth to all that affects your tax rate. This FAQ at Ohio Department of Job and Family Services is a great place to get started.
Generally, there is a new employer rate of 2.7% on the first $9,000 in employee wages in 2022 if you have not been paying payroll taxes for four consecutive quarters (this rate is 5.5% if you are in the construction industry). Otherwise, rates range from 0.8% to 10.2%.
For 2022, part of your 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.
What else do I need to know about taxes in Ohio?
Answer: Two items stand out.
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.
And if you’ve registered for a withholding account with Ohio, you do not need to register for a separate school district tax withholding account. Paying school district tax and withholding tax is done through the same system and included on the same form for efficiency. For a list of cities in Ohio that assess a school district tax, click here.
Municipal Payroll Taxes
City payroll taxes in Ohio are primarily based on the worked-in location. Therefore, it is mandatory for the employer to withhold for the area in which the employee works, but not mandatory to withhold for an employee’s home taxes. However, there are cities that also require resident taxes to be paid. In addition, some resident tax types allow for either a full or partial credit based on what has already been paid for the worked-in tax type.
Employers can verify both resident and work municipal taxes by going directly to the Ohio Tax Finder and entering the work and home address.
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.
Federal payroll taxes
What is FICA?
Answer: FICA stands for Federal Insurance Contribution Act. Most people think this is the payroll tax, especially when discussing what the employer pays and what the employee pays.
FICA is a combination of the Social Security tax and Medicare tax. The employer and employee will each pay 6.2% toward Social Security and 1.45% toward Medicare.
There is a limit to the amount of wages taxed for Social Security tax, which is $147,000 for the 2022 tax year. Medicare tax is imposed on all earned income.
How do I know how much federal income tax to withhold?
Answer: To do this, you will need Form W-4, as we mentioned above. Each employee will fill this out when they begin working for you and update it when their tax situation changes.
This form will allow the employee to inform you of dependents and preferences about their federal income tax withholding.
What other federal taxes do I need to be aware of?
Answer: These two should be top of mind:
You 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 you will still want to withhold it.
This is the Federal Unemployment Tax Act (FUTA), a tax assessed on the first $7,000 in wages paid to each employee each tax year. The rate for 2022 is 6%. Credits are available that can reduce your rate to 0.6%.
Whether you’re planning to go it alone or need help from a qualified accountant, you’ve got a head start with the information you need to process your Ohio payroll successfully. Use Gusto’s Ohio Hourly Paycheck Calculator to see how taxes are calculated.
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.