Ohio Payroll: Employer Tax and Software Guide

Ohio simplified its state income tax for 2026 and remains one of the hardest states in the country to run payroll in. If a fellow founder asked me where to start, I would skip the state rate and ask where their people live and work.

This guide explains why, then covers what Ohio requires, what changed for 2026, and how 10 payroll providers price the work. The state rate went flat on January 1, 2026: 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 the state layer sit hundreds of municipal income taxes, collected by at least three different bodies, including the Regional Income Tax Agency (RITA) and the Central Collection Agency (CCA). An employer with staff in Columbus and Cleveland already files with two separate city collectors, the City of Columbus and the CCA, before a single school district enters the picture.

More than 200 school districts also levy an income tax, one that follows where the employee lives rather than where they work. And workers compensation cannot be bought from a private insurer at any price, because the state runs a monopoly.

The four layers of Ohio payroll

Ohio payroll has four tax layers: state income tax, municipal income tax, school district income tax, and unemployment insurance. Workers compensation, bought only from the state fund, sits beside them as the fifth row in the table below. Most state payroll guides cover only withholding and unemployment, which in Ohio describes maybe a third of the actual obligation.

Look closely at the Basis column for the two local taxes. 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 is now flat

House Bill 96, which took effect on September 30, 2025, collapsed Ohio's remaining brackets into a single rate for tax year 2026.

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 has not changed since tax year 2022, according to the Department of Taxation's rate tables. Business income is unaffected and remains at a separate flat 3 percent after the first $250,000 deduction.

The third detail is the supplemental withholding rate on bonuses and commissions: 2.75 percent, the same as the headline rate. Separately, the Department of Taxation updated its regular withholding tables on August 1, 2026. Check both in your platform's configuration.

Registering and remitting Ohio withholding

Registering for Ohio withholding tax is quick, and the deadline is short. You must open a withholding account online through OH|TAX eServices within 15 days of the day the withholding liability starts, using your federal Employer Identification Number (EIN) and legal business name. You can file returns and make payments as soon as the account exists.

How often you remit is not your choice. The Ohio Department of Taxation assigns a frequency each calendar year based on the combined state and school district tax you withheld in the 12 months ending June 30 of the prior year, so the assignment can change as your payroll changes.

Paying every IT 501 does not finish the year. Form IT 941, the annual reconciliation, is due January 31 for the prior tax year and has to agree with the W-2 and 1099 totals you upload. School district withholding runs on the same frequency as state withholding, with one exception: partial-weekly filers remit school district tax monthly.

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

Hundreds of Ohio cities and villages levy an income tax. Rates vary by city: Columbus and Cleveland each charge 2.5 percent, and Cincinnati 1.8 percent. Withholding follows where the work is physically performed.

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

For 2026, 214 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.

The operational requirement is an accurate home address for every employee, mapped to a school district number. Because only some districts levy the tax and district boundaries do not follow municipal ones, an address two streets apart can produce different answers.

You cannot reason the district out from a city name. It takes a lookup, such as the Department of Taxation's Finder, and the lookup has to be redone whenever an employee moves.

Unemployment insurance and the workers comp monopoly

Beyond the income taxes, Ohio employers carry two employer-only costs: unemployment insurance and workers compensation, which only the state fund can sell.

Unemployment insurance

Several Ohio unemployment insurance figures moved for 2026, but the taxable wage base did not.

The wage base stayed at $9,000, a figure the Department of Job and Family Services publishes directly. What changed is the arrival of the Technology and Customer Service Fee, which the department folds into each 2026 rate: a new employer's 2.85 percent is the unchanged 2.7 percent contribution rate plus the 0.15 percent fee.

The fee applies in 2026 and 2027 only. All contributory employers, meaning those that pay regular quarterly unemployment contributions, owe 0.15 percent on wages up to $9,000 per employee, built into the annual rate determination and paid with those contributions.

Because the fee is not an unemployment contribution, the department leaves it out when it certifies unemployment payments to the IRS. The money funds replacement of a twenty-year-old benefits system, along with new self-service tools and fraud protection.

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.

Workers compensation you cannot shop for

Ohio is one of four monopolistic states, with North Dakota, Washington, and Wyoming: employers there cannot shop for workers compensation, because there is no private market to compare quotes in. Coverage must come from the Ohio Bureau of Workers’ Compensation, the exclusive provider in the state, which describes itself as one of the largest state-run insurance systems in the United States.

Minimum wage

The state minimum wage is $11.40 per hour from January 1, 2027 ($11.00 through December 31, 2026), with a tipped rate of $5.70 ($5.50 in 2026), after a 3.5 percent inflation adjustment under the constitutional amendment that indexes it.

Both rates apply only where annual gross receipts exceed $420,000 from January 1, 2027 ($405,000 in 2026), according to the Ohio Department of Commerce. Below that threshold, and for 14- and 15-year-olds, the federal $7.25 applies.

Ohio law preempts local minimum wage ordinances, so no city can set its own rate. Unlike the municipal tax layer, there is no city-by-city variation to track here.

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.

OnPay

One plan at $49 per month plus $6 per employee, with no tiers to climb; HR tools and time tracking are paid add-ons. Local tax filing is part of the base plan rather than an upgrade, which matters more in Ohio than almost anywhere.

OnPay publishes an Ohio payroll tax and registration guide that lists the SD 101 among the filings it handles, a reasonable signal that it keeps state and local tables current.

Gusto

Gusto pairs automatic tax filing and published pricing with onboarding built into the same account. Simple runs $49 per month plus $6 per employee after a base increase during 2025. In Ohio, Gusto files the SD 101 and SD 141 for school district tax. It files the municipal returns too, once you register with each city or with RITA yourself.

The constraint is that Simple covers a single state only. Ohio has reciprocity agreements with all five neighboring states, so a hire who lives across a state line can mean withholding for a second state, which moves you to Plus at $80 plus $12 per employee.

Patriot Software

Patriot Software has the cheapest full-service plan in this comparison at every headcount modeled, and it stands out 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; new hire reports remain yours to file.

Patriot's Basic plan costs $17 plus $4 and is for employers who file taxes themselves. In Ohio that means handling state, municipal, and school district returns by hand across however many jurisdictions you touch.

Square Payroll

Square's full-service plan runs $35 per month plus $6 per person paid. For a Columbus or Cleveland restaurant already running Square point of sale, timecard data flows straight into payroll with no integration work.

Square's Ohio coverage has one limit worth knowing. It files the SD 101 and SD 141 for school district tax, but it files municipal tax only through RITA, the Central Collection Agency, and the City of Columbus; for other cities it calculates the tax and leaves the filing to you.

SurePayroll

SurePayroll is owned by Paychex and built for very small employers and household employers. Its small business plan is $29 per month plus $7 per employee, with a flat $9.99 monthly multi-state fee. Local tax is the weak spot: SurePayroll charges a separate fee in areas that require local taxes, a meaningful extra in a state with hundreds of taxing cities.

QuickBooks Workforce Payroll

QuickBooks Payroll Core became Workforce Payroll in a 2026 rename and runs $50 per month plus $7 per employee after the per-employee increase of July 1, 2026. The argument for it is unchanged: if your books live in QuickBooks Online, payroll reaches the general ledger without an export.

QuickBooks Workforce Payroll files only federal and state taxes. Intuit handles certain local taxes only on Workforce Premium and Elite, which matters for every employee who works in a taxing Ohio city.

ADP RUN

Every ADP RUN package covers the whole payroll tax cycle, from calculating and filing to depositing and reconciling, and ADP pays the resulting fines if it makes a filing error. ADP lists multi-state and local-jurisdiction payroll and tax filing as included in all four packages, which is the part that matters most in Ohio.

The cost is opacity. ADP publishes no rates for its Essential, Enhanced, Complete, or HR Pro packages, so every price starts with a quote. There is no contract to sign, and ADP says service can be ended at any time.

Paychex Flex

Paychex competes on service rather than software, with a payroll specialist included on the Complete package and sold as an add-on below it. Pricing is quote-only for all four payroll packages. 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, Paycor has run as a business unit of Paychex since Paychex completed its acquisition in April 2025. It sits between small-business payroll and full HCM (human capital management), with performance, learning, and benefits modules alongside payroll. Its small business bundles are published, starting at $99 a month plus $5 per employee for Basic.

Rippling

Rippling unifies payroll, HR, and IT provisioning (setting up each employee's apps and devices) on one employee record. Its pricing page lists no rates; its small-business page starts payroll plans at $8 per user per month plus a $40 monthly base fee. Its blog prices the core platform at $8 per employee and domestic payroll at another $8 on annual billing, so a configured quote can run higher than that start.

Rippling's blog also estimates $15 to $25 per employee per month for a 100-person company running HR, payroll, benefits, and time tracking.

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. Paychex Flex, Paycor, and Rippling are not modeled: Paychex quotes every package, and the reviews above give Paycor's and Rippling's starting rates.

Patriot and Square are the cheapest published options at every headcount modeled. Patriot files all local and city taxes, while Square's municipal filing reaches only RITA, the CCA, and the City of Columbus. SurePayroll looks competitive on its base price but adds a separate charge where local taxes apply, and QuickBooks Workforce Payroll files no local taxes at all.

Choosing a payroll provider for Ohio

Judge a payroll provider for Ohio on local tax handling first and price second. Ask these five questions in a demo, and test the answers in a trial where you can.

Before you choose

FirstHR is an onboarding and HR platform, not a payroll provider. Payroll, payroll tax filing, and benefits administration come from the providers above, and in a state with this much local tax complexity, choosing one that genuinely files municipal and school district returns is the single most valuable decision on this page.

What we handle is the paperwork layer that feeds payroll. The Ohio IT 4, Form I-9, and the federal W-4 go on each new hire's first-day task list, and completed forms are kept in the employee file; the forms themselves are completed outside the platform. Offer letters and acknowledgments go out for e-signature, and employee records and document management come at a flat $98 a month for up to 10 people or $198 for 11 to 50.

Two of the Ohio requirements above are record problems rather than payroll problems: capturing a complete and accurate home address at hire, which determines school district withholding, and filing the new hire report within twenty days. A task with a deadline in an onboarding workflow can carry both.

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 based on the worksite, 2.5 percent in Columbus and Cleveland; school district income tax of 0.25 to 2 percent based on the residence in 214 districts; and unemployment insurance on the first $9,000 of wages at 2.85 percent for new non-construction employers, including a 0.15 percent technology fee.

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. The rate comes from House Bill 96, in effect since September 30, 2025. Business income stays at a separate flat 3 percent after the first $250,000 deduction, and the supplemental withholding rate on bonuses is also 2.75 percent.

How do Ohio municipal income taxes work for employers?

Hundreds of Ohio cities and villages levy one, with Columbus and Cleveland at 2.5 percent and Cincinnati at 1.8 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 214 Ohio school districts for 2026, 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, both including the new technology fee. Before the fee, experienced employers' contribution rates run from 0.4 to 10.1 percent, and the mutualized rate is 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 that applies in 2026 and 2027 only and pays to replace 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, so it is not reported to the IRS as one.

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, which describes itself as one of the largest state-run insurance systems 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?

$11.40 per hour for non-tipped employees and $5.70 for tipped employees from January 1, 2027 ($11.00 and $5.50 in 2026), after a 3.5 percent inflation adjustment. Both apply only where annual gross receipts exceed $420,000 from January 1, 2027 ($405,000 in 2026). Smaller employers and 14- and 15-year-olds 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, and rehired employees must be reported again. Alongside that report, a new hire needs the federal W-4, the state IT 4, and a complete home address, since that address drives school district withholding.