Ohio Payroll: Employer Tax and Software Guide
Ohio payroll for employers: the new flat 2.75 percent rate, municipal and school district taxes, the state workers comp monopoly, and 10 providers.
Ohio Payroll: The Employer Guide
A state rate that went flat this year sitting on top of hundreds of city taxes and about 200 school district taxes, workers compensation you can only buy from the state, and how 10 payroll providers price the work
Ohio simplified its state income tax this year and remains one of the hardest states in the country to run payroll in. Both statements are true, and understanding why is the whole point of this guide.
The state rate went flat on January 1: 2.75 percent on nonbusiness income above $26,050, replacing a multi-bracket structure. That part genuinely got easier. But the state layer was never where Ohio payroll went wrong. Underneath it sit hundreds of municipal income taxes collected by at least three different bodies, roughly 200 school district taxes that follow where the employee lives rather than where they work, and workers compensation that cannot be bought from a private insurer at any price because the state runs a monopoly.
An employer with staff in Columbus, Cleveland, and a township outside both is filing with more separate authorities than a business in most states deals with nationwide. This guide covers what Ohio requires, what changed for 2026, and how 10 payroll providers price the work.
The four layers of Ohio payroll
Most state payroll guides cover withholding and unemployment. In Ohio that describes maybe a third of the actual obligation, so it is worth seeing the whole stack before going into any one piece.
| Layer | Basis | 2026 figure | Who collects it |
|---|---|---|---|
| State income tax | Statewide | Flat 2.75% above $26,050 | Ohio Department of Taxation |
| Municipal income tax | Where work is performed | Typically 0.5% to 3% | RITA, CCA, or the city directly |
| School district income tax | Where the employee lives | 0.25% to 2%, about 200 districts | Ohio Department of Taxation |
| Unemployment insurance | Employer only | $9,000 base, 2.85% new employer | Department of Job and Family Services |
| Workers compensation | Employer only | State fund only, no private market | Ohio Bureau of Workers Compensation |
Read the third column of the middle two rows carefully. Municipal tax follows the worksite. School district tax follows the residence. They are different bases resolved from different addresses, and an employee who lives in a taxing school district and commutes into a taxing city triggers both independently.
The state rate went flat this year
House Bill 96, the biennial budget signed by Governor DeWine on June 30, 2025, collapsed Ohio's remaining brackets into a single rate for tax year 2026.
| Tax year | Structure | Top rate |
|---|---|---|
| 2024 | Multi-bracket | 3.5% above $115,300 |
| 2025 | Two brackets above the zero band | 3.125% above $100,000 |
| 2026 | Flat above the zero band | 2.75% above $26,050 |
Three details matter for an employer beyond the headline. The first $26,050 of nonbusiness income is taxed at zero for everyone, and that threshold is not indexed for inflation for 2025 and 2026, so it stays put while wages rise. Business income is unaffected and remains at a separate flat 3 percent after the first $250,000 deduction. And the supplemental withholding rate on bonuses and commissions is 3.5 percent, set separately in law and not pulled down with the headline rate, which is a mismatch worth checking in your platform's configuration.
Municipal and school district taxes
This is where Ohio payroll earns its reputation, and where the difference between payroll platforms becomes financially meaningful rather than cosmetic.
Municipal income tax
Roughly half of Ohio's municipalities levy an income tax. Rates generally run between 0.5 and 3 percent, with the largest cities clustered near the top: Columbus, Cleveland, and Akron are each at 2.5 percent, Cincinnati somewhat lower. Withholding follows where the work is physically performed.
| Collecting body | Scope |
|---|---|
| Regional Income Tax Agency | Acts for hundreds of Ohio cities and villages |
| Central Collection Agency | Cleveland and a group of other municipalities |
| Individual city offices | Columbus and others collect directly |
| JEDD arrangements | Joint economic development districts with their own levies |
The fragmentation is the problem rather than the rates. A business with an office in Columbus, a second location in a RITA member village, and a field technician working in a Central Collection Agency city is filing with three separate authorities on three separate schedules. None of that is difficult individually. All of it is easy to get wrong at once.
School district income tax
About 200 of Ohio's school districts levy their own income tax at rates from 0.25 to 2 percent. This layer is residence-based, which makes it structurally different from the municipal layer.
| Element | How it works |
|---|---|
| Basis | Where the employee lives, not where they work |
| Rate range | 0.25% to 2%, set by each district |
| Districts levying it | Roughly 200 of more than 600 statewide |
| Periodic return | Form SD 101 |
| Annual reconciliation | Form SD 141 |
The operational requirement is an accurate home address for every employee, mapped to a school district number. Because only about a third of Ohio districts levy the tax and district boundaries do not follow municipal ones, an address two streets apart can produce different answers. This is not something an employer can reason through; it needs a lookup, and it needs to be redone whenever an employee moves.
Unemployment insurance and the workers comp monopoly
Unemployment insurance
Two figures moved for 2026 and one that many sources report incorrectly did not.
| Item | 2025 | 2026 |
|---|---|---|
| Annual taxable wage base | $9,000 | $9,000 |
| New employer rate | 2.7% | 2.85% |
| New construction employer rate | 5.6% | 5.85% |
| Experience rate range | 0.4% to 10.1% | 0.4% to 10.1% |
| Mutualized rate | 0.1% | 0% |
| Technology and Customer Service Fee | None | 0.15% on wages up to $9,000 |
The wage base stayed at $9,000, which several vendor guides currently report as $9,500. The Department of Job and Family Services publishes the figure directly and it has not moved. What did change is the new employer rate, up fifteen basis points, and the arrival of the technology fee.
That fee applies in 2026 and 2027 only. All contributory employers pay 0.15 percent on wages up to $9,000 per employee, included in the annual rate determination and paid with quarterly contributions. It is not an unemployment contribution, so it is not reported to the IRS when certifying unemployment payments and it does not credit to the employer reserve account. It funds replacement of a twenty-year-old benefits system, and business groups successfully resisted making it permanent.
Rate determinations are mailed on or before December 1 for the following year, and 2026 rates include a minimum-safe-level increase because the trust fund sits below its target reserve. Our guide to state unemployment tax covers how experience rating works.
Workers compensation you cannot shop for
Ohio is one of four monopolistic states, with North Dakota, Washington, and Wyoming. Coverage must come from the Ohio Bureau of Workers Compensation, which is the largest exclusive state fund in the country. There is no private market to compare quotes in, and no payroll provider can place the policy as part of a bundle.
Minimum wage
The state minimum wage rose to $11.00 per hour on January 1, 2026, with a tipped rate of $5.50, reflecting a 2.8 percent inflation adjustment under the constitutional amendment that indexes it. Both rates apply only where annual gross receipts exceed $405,000, up from $394,000. Below that threshold, and for employees under 16, the federal $7.25 applies.
Ohio preempts local minimum wage ordinances, so unlike the municipal tax layer there is no city-by-city variation to track here. Our guide to the minimum wage for tipped employees covers how the federal and state tests interact.
10 payroll providers for Ohio employers compared
Every provider below files Ohio state withholding and unemployment insurance. In Ohio the differentiator is narrower and more consequential than in most states: whether the platform actually files municipal returns through the collecting agency rather than only calculating the withholding, and whether it resolves school district tax from the residence address.
| Provider | Best For | Starting Price | Pricing Model | Municipal Filing | School District Tax | BWC Reporting | Trial |
|---|---|---|---|---|---|---|---|
| OnPay | All-in pricing, no tiers | $49 + $6/ee | Base + PEPM | 1 month | |||
| Gusto | First-time payroll buyers | $49 + $6/ee | Base + PEPM | Until 1st run | |||
| Patriot | Lowest cost, tight budgets | $37 + $5/ee | Base + PEPM | 30 days | |||
| Square | Retail and restaurant teams | $35 + $6/ee | Base + PEPM | Free trial | |||
| SurePayroll | Very small and household teams | $29 + $7/ee | Base + PEPM | Varies | |||
| QuickBooks | Existing QuickBooks accounting | $50 + $6.50/ee | Base + PEPM | 30 days | |||
| ADP RUN | Local tax depth at scale | ~$79 + $4/ee | Quote | 3 months | |||
| Paychex Flex | Hands-on service model | Quote | Quote | Varies | |||
| Paycor | Ohio-headquartered HCM | Quote | Quote | Demo | |||
| Rippling | Payroll tied to HR and IT | $35 + $8/ee | Modular PEPM | Demo |
OnPay
One plan at $49 per month plus $6 per employee, everything included, no tiers to climb. Local tax filing is part of the base plan rather than an upgrade, which matters more in Ohio than almost anywhere. OnPay maintains an Ohio-specific tax rates resource, a reasonable proxy for whether a vendor keeps state and local tables current.
Gusto
The most common first payroll purchase for US small businesses, with automatic tax filing, published pricing, and the strongest onboarding experience among payroll-first platforms. Simple runs $49 per month plus $6 per employee after a base increase in early 2026, and handles Ohio municipal and school district filing.
The constraint is that Simple covers a single state only. Ohio borders five states with reciprocity agreements, so cross-border employment is common here and one such hire moves you to Plus at $80 plus $12 per employee.
Patriot Software
The cheapest legitimate full-service payroll on the market, and notable in Ohio because Full Service includes local tax filing rather than treating it as an add-on. Full Service is $37 per month plus $5 per employee. Basic is $17 plus $4 if you file taxes yourself, which in Ohio means handling state, municipal, and school district returns by hand across however many jurisdictions you touch.
Square Payroll
At $35 per month plus $6 per person, Square is the cheapest full-service option with published pricing, and the full-service plan covers federal, state, and local tax calculations, payments, and filings. For a Columbus or Cleveland restaurant already running Square point of sale, timecard data flows straight into payroll with no integration work.
SurePayroll
Owned by Paychex and built for very small employers and household employers. Full Service is $29 per month plus $7 per employee, with a flat $9.99 monthly multi-state fee. Local tax filing is the weak spot: it is available but treated as an add-on rather than standard, which is a meaningful gap in a state where most employees sit inside at least one taxing jurisdiction.
QuickBooks Workforce Payroll
Core is $50 per month plus $6.50 per employee, and the argument for it is unchanged: if your books live in QuickBooks Online, payroll reaches the general ledger without an export. Ohio local tax support is limited and generally sits on higher tiers, which is a real consideration when most Ohio employees trigger at least one local jurisdiction.
ADP RUN
ADP has the deepest tax compliance engine in the category, and Ohio is the state where that depth converts most directly into value. Multi-jurisdiction local filing with address-level resolution is routine work for ADP in a way it is not for smaller platforms, and ADP maintains a local tax code locator covering Ohio jurisdictions.
The cost is opacity. ADP does not publish RUN pricing; third-party estimates put Essential near $79 per month plus $4 per employee, but every quote is individual. Contracts typically run a year with automatic renewal and a 30 to 60 day cancellation window.
Paychex Flex
Paychex competes on service rather than software, with a named representative at higher tiers. Pricing is quote-only and quarterly administrative charges appear regularly in customer reports. In Ohio the case for it is specific: if you have staff across several taxing municipalities and want someone to call when a city sends a notice, that access has genuine value.
Paycor
Headquartered in Cincinnati with a significant Columbus presence, Paycor knows Ohio local tax as home-market knowledge rather than as one state among fifty. It sits between small-business payroll and full HCM, with performance, learning, and benefits modules alongside payroll. Pricing is quote-based and implementation is a project rather than a signup.
Rippling
Rippling unifies payroll, HR, and IT provisioning on one employee record. The core platform is $35 per month plus $8 per employee, with payroll as a separate module. Real-world all-in costs land between $25 and $45 per employee per month once you assemble a working configuration.
What each provider actually costs an Ohio employer
The table below models published rates at three headcounts, with a column for how each handles local tax because that is the axis that matters here.
| Provider | 10 employees | 25 employees | 50 employees | Local Tax | Notes |
|---|---|---|---|---|---|
| SurePayroll | $99 | $204 | $379 | Add-on | Local filing not standard |
| Square | $95 | $185 | $335 | Included | Local filing included |
| Patriot | $87 | $162 | $287 | Included | Local filing included |
| OnPay | $109 | $199 | $349 | Included | Maintains an Ohio tax resource |
| Gusto Simple | $109 | $199 | $349 | Included | Single state only |
| QuickBooks | $115 | $213 | $375 | Limited | Local support is tier-dependent |
| ADP RUN | ~$119 | ~$179 | ~$279 | Quote | Deepest municipal coverage |
Square and Patriot are the cheapest published options and both include local filing, which is an unusually good combination for Ohio. SurePayroll looks competitive on the base fee and treats local filing as an add-on, which undercuts the value in a state where most employees sit in a taxing jurisdiction. QuickBooks has the same issue on its entry tier.
Choosing a payroll provider for Ohio
Before you choose
FirstHR does not process payroll, file payroll taxes, or administer benefits. Every provider above does something we do not, and in a state with this much local tax complexity, choosing a platform that genuinely files municipal and school district returns is the single most valuable decision on this page.
What we handle is the document layer that feeds payroll: onboarding workflows, e-signature on the IT 4 and federal W-4, I-9s and offer letters, employee records, and document management for 5 to 50 employee US teams at a flat $98 to $198 per month. Two of the Ohio requirements above are record problems rather than payroll problems, namely capturing a complete and accurate home address at hire, which determines school district withholding, and filing the new hire report within twenty days. Our guide to Ohio new hire reporting covers that filing in detail, and the Ohio HR compliance guide covers the wider set of state obligations.
Frequently Asked Questions
What are the Ohio payroll taxes an employer has to handle?
Four layers: state income tax at a flat 2.75 percent above $26,050; municipal income tax of roughly 0.5 to 3 percent based on the worksite; school district income tax of 0.25 to 2 percent based on the residence in about 200 districts; and unemployment insurance on the first $9,000 of wages at 2.85 percent for new non-construction employers plus a 0.15 percent technology fee. See our overview of payroll taxes by state for how this compares elsewhere.
What is the Ohio income tax rate?
A flat 2.75 percent on nonbusiness income above $26,050 for tax year 2026, with zero below that, under House Bill 96 signed on June 30, 2025. Business income stays at a separate flat 3 percent after the first $250,000 deduction. The supplemental rate on bonuses is 3.5 percent, set separately in law and not reduced with the headline rate.
How do Ohio municipal income taxes work for employers?
About half of Ohio municipalities levy one, generally 0.5 to 3 percent, with Columbus, Cleveland, and Akron at 2.5 percent. Withholding follows where work is performed, though residents may also owe their home city subject to a credit that varies by ordinance. Collection runs through the Regional Income Tax Agency, the Central Collection Agency, or individual city offices, so an employer in three cities may file with three bodies.
What is the Ohio school district income tax?
A residence-based tax levied by roughly 200 of Ohio's 600-plus school districts at 0.25 to 2 percent. It follows where the employee lives rather than where they work, reported on Form SD 101 and reconciled on Form SD 141. Accurate home addresses mapped to district numbers are the operational requirement, and the mapping needs redoing whenever an employee moves.
What is the Ohio unemployment insurance wage base?
$9,000 per employee for 2026, unchanged. The new employer rate rose to 2.85 percent and the construction rate to 5.85 percent, with experienced employers between 0.4 and 10.1 percent and a mutualized rate of zero. Rate determinations are mailed on or before December 1 for the following year and filing is electronic.
What is the Ohio Technology and Customer Service Fee?
A 0.15 percent surcharge on wages up to $9,000 per employee, applying in 2026 and 2027 only, introduced by House Bill 96 to fund replacement of the state unemployment benefit system. It is included in the annual rate determination and paid with quarterly contributions, but it is not an unemployment contribution and does not credit to the employer reserve account.
Can Ohio employers buy workers compensation from a private insurer?
No. Ohio is one of four monopolistic states, with North Dakota, Washington, and Wyoming. Coverage comes from the Ohio Bureau of Workers Compensation, the largest exclusive state fund in the country, and every employer with one or more employees must carry it. No payroll provider can place the policy or bundle it.
What is the minimum wage in Ohio?
$11.00 per hour for non-tipped employees and $5.50 for tipped employees as of January 1, 2026, a 2.8 percent inflation adjustment. Both apply only where annual gross receipts exceed $405,000, up from $394,000. Smaller employers and employees under 16 fall back to the federal $7.25, and Ohio preempts local minimum wage ordinances.
How long do Ohio employers have to report a new hire?
Twenty days from the date of hire, filed with the Ohio New Hire Reporting Center, with rehires counting again. Alongside it a new hire needs the federal W-4, the state IT 4, and a complete home address, since that address drives school district withholding. See our guide to Ohio new hire reporting for the filing detail.