Where is Ohio?
Ohio stretches across 115,000 km² of the American Midwest and sits in the UTC-5 time zone. To the north, Lake Erie forms a natural border with Canada. To the south, the state is bounded by the Ohio River. With a population of 11.5 million, the Buckeye State ranks number 7 among the most populous US states. Its capital, Columbus, has close to 800,000 residents, making it the largest city in the state.
Ohio's economy is built on growing industries that reflect the Midwest's industrial leadership and its steady drive to innovate. In 2019, more than 130,000 new businesses were founded in the state, an increase of 63 percent over 2010. In CNBC's latest rankings for 2021, Ohio placed tenth among the "Top States for Business", second for cost of doing business and seventh for access to capital. Ohio is also one of the 10 most popular US states for foreign direct investment. Those are just a few facts about Ohio, and there is much more.
A thriving economy
With a gross state product (GSP) of nearly $700 billion in 2019, Ohio is the seventh-largest economy in the United States and number 21 worldwide. In manufacturing GDP, Ohio ranks fourth.
Recent indicators leave no doubt that Ohio is the best-positioned state in the Midwest to recover from an economic downturn. In recent years, Ohio's growth in private-sector output, jobs and wages has outpaced every other state in the region. Over the past decade, Ohio created more private-sector jobs than any other state in the region, with growth of almost 14 percent between 2010 and 2019.
Site Selection ranked Ohio first in its 2019 Governor's Cup, the ranking of states for economic and business appeal. The reason: Ohio landed the most new corporate facility projects per capita in the nation. It also ranked second for total number of projects, making it the only state in the top three in both categories.
Ohio's strong foundation appeals to business decision-makers. Investment in talent development and in key industries will keep diversifying the state's economy.
FDI: historically important
For more than 40 years, companies from around the world have chosen to make Ohio their home. International businesses are a welcome and valued part of the state's economy. According to Site Selection Magazine (2020), the Buckeye State ranks number 4 in the US for foreign direct investment projects.
Foreign direct investment (FDI) comes 40 percent each from European and Asian companies, with the remaining 20 percent from Canada and other international markets. JobsOhio, the state's private, nonprofit economic development corporation, has completed 430 international business projects since 2013 on its own, with ten billion dollars invested and close to 30,000 jobs created. German companies are the third-largest employer, after Japanese and British ones.
With investment from 51 countries and 4,300 international locations continuing to strengthen its economy, Ohio has built a culture of working hand in hand with international companies and works to make sure they succeed and grow in the US market. As you can see, there is plenty in Ohio's favor. The state wins people over with tailored services and incentives.
Income tax in Ohio
Ohio levies income tax of up to 3.125% (tax year 2025: 0% up to $26,050 of income, 2.75% above that, and 3,125% from $100,000); from tax year 2026, a flat rate of 2.75% applies above the exemption threshold. On top of that, federal income tax is due.
Corporate tax in Ohio
Ohio has no corporate income tax. Instead, the Commercial Activity Tax (CAT) of 0.26% applies to gross receipts attributable to Ohio above $6 million a year. In addition, federal corporate tax is due.
Sales tax in Ohio
The US has no European-style VAT. Instead, states, counties and municipalities levy a local sales tax on sales of goods (but not services).
Ohio sales tax rate
Ohio's state sales tax is 5.75%. Cities and counties add an average of 1.42%, for a combined average of 7.17%.
Ohio nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date
August 1, 2019
Included transactions:
Gross receipts from sales of tangible personal property for storage, use or consumption in the state, or from services whose benefit is realized in the state
Treatment of exempt sales:
Exempt sales and exempt services count toward the threshold
Trigger:
Sales or transactions
Sales/transaction threshold:
$100,000 or 200 transactions
Evaluation period:
The threshold applies to the current or previous calendar year
Additional information:
- The new law repeals the previous cookie nexus law, which applied only to software or network providers.
- Registration requirements: Ohio requires remote sellers to register and start collecting Ohio sales tax the day after they exceed the economic nexus threshold. For more, see Out-of-state sellers.
- HB166
Ohio marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
- September 2019
Economic nexus threshold:
Gross sales of more than $100,000 or 200 transactions in Ohio in the current or previous calendar year. Marketplace facilitators count all sales made through the marketplace (direct and third-party) toward the threshold. Marketplace sellers also count both direct and marketplace sales toward the threshold.
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register with the Ohio Department of Taxation and collect Ohio sales tax on sales not taxed by a marketplace facilitator.
- Remote marketplace sellers: If you sell only through one or more marketplace facilitators, you do not need to register, even if you exceed the economic nexus threshold.
- In-state multichannel sellers: You must register with the Ohio Department of Taxation and collect tax on sales not taxed by a marketplace facilitator.
- In-state marketplace sellers: You may need to register; contact the Ohio Department of Taxation for more information.
- Marketplace facilitators: A marketplace facilitator should hold one seller's tax account for its own sales to Ohio consumers and a separate seller's tax account for third-party sales.
- Learn more here and here.
For an overview of every state, see our directory US states at a glance. Our guide Which US state is best for your company? helps you pick the right state, and the guide to forming a US company walks you through the process. And if you want to run your US LLC tax-free without a US permanent establishment, our sister site zerotax.llc is the place to go.
Our services for Ohio:
From choosing a legal structure to getting your EIN: everything a US company formation involves is under US company formation. We'll map out your path to Ohio together in a consultation.