2024 overview of sales tax in Ohio

Welcome to Kintsugi's rundown on tax rates in the state of Ohio. Ohio's sales tax rates can vary depending on state, county/city, and local tax rates. The base Ohio sales tax rate is 5.75%.

When it comes to counties, the highest rate can be found in Cuyahoga County, sitting at 8%. The lowest county rate is in Erie County, at 6.75%.

Among various districts, Montgomery's Trotwood district has the highest combined rate of 7.5%, while Ottawa's Port Clinton district enjoys one of the lowest at 6%.

Sales tax range in Ohio

Ohio's sales tax system, including the Ohio sales tax rate, is composed of a base state rate along with additional county rates, both of which can fluctuate annually. Here's a brief overview of the Ohio State Sales Tax ranges for 2024 compared to 2023:

The Ohio sales tax calculator can be especially advantageous for those involved in digital sales and services. With the growing inclusion of digital goods and services like streaming subscriptions and app downloads under taxable items, accurately computing the tax obligations becomes paramount. This calculator simplifies managing tax liabilities, ensuring compliance with state tax laws.

State Sales Tax Rate: The state tax rate remains at 5.75% in 2024, consistent with the rate in 2023. This is the baseline rate applied to all taxable goods and services in Ohio.

County Sales Tax Variations

In Franklin County, the sales tax rate has increased from 1.25% in 2023 to 1.5% in 2024, bringing the total sales tax rate to 7.25%.

Cuyahoga County maintains its sales tax rate at 1.25%, resulting in a combined rate of 7% in both 2023 and 2024.

Hamilton County has witnessed a rise from a 1% rate in 2023 to 1.25% in 2024, making the total rate 7% for 2024.

Summit County’s sales tax rate stays constant at 1%, keeping the combined rate at 6.75% for both years.

Municipal Surtaxes

Some regions additionally impose municipal surtaxes.

Cleveland (within Cuyahoga County) retains its 0.25% municipal surtax in 2024, similar to 2023, leading to a combined total sales tax of 7.25%.

In Cincinnati (within Hamilton County), there is still no separate municipal surtax, keeping the combined rate at 7% for 2024, following the county's increase.

Special Districts

Specific special taxing districts, like transit or development districts, might impose additional taxes.

The Central Ohio Transit Authority (COTA) continues its 0.5% surtax in 2024, applied in certain areas of Franklin County, so the effective rate there reaches 7.75%, up from 7.5% in 2023 due to the county increase.

These adjustments reflect regional economic strategies and infrastructure planning within Ohio. Overall, the sales tax rates exhibit modest increases in several counties and special districts.

Calculating Ohio sales tax

Identify the State Sales Tax Rate: Ohio's base state sales tax rate is 5.75%.

Determine Applicable Local Tax Rates: Check the local county tax rates which can range from 0.25% to 2.25%.

Calculate Combined Tax Rate: Add the local tax rate to the state tax rate (e.g., if local rate is 1%, combined rate = 6.75%).

Sales Tax for E-Commerce: E-commerce transactions are subject to the same sales tax rules as in-person sales. Determine the customer's location to apply the correct local tax rate.

Sales Tax for SaaS: Software as a Service (SaaS) is generally taxable in Ohio. Apply the combined state and local tax rate to the purchase price.

Sales Tax for Services: Services are generally not taxable in Ohio. Some exceptions apply, such as for cleaning, maintenance, and repair services.

Identify Taxable and Non-Taxable Goods/Services: Exempt items include most groceries and prescription medications. Taxable items include tangible personal property and certain digital goods.

Calculate Taxable Amount: Multiply the purchase price by the applicable combined tax rate.

Example Calculation: If purchasing a $100 item in a locality with a 1% local tax rate: $100 x 6.75% = $6.75 sales tax.

Understanding use tax in Ohio

Use tax in Ohio is a tax imposed on the storage, use, or consumption of tangible personal property and certain services when the sales tax has not been paid. This tax applies to both individuals and businesses and helps to ensure fair competition by leveling the playing field between in-state and out-of-state sellers.

For consumers, use tax typically becomes a factor when they make purchases from out-of-state vendors who do not charge Ohio sales tax. Common examples could include online purchases, catalog orders, or items bought during travels. If the out-of-state vendor does not charge sales tax at the time of purchase, Ohio residents are responsible for calculating and remitting the use tax directly to the Ohio Department of Taxation. The use tax rate is the same as the sales tax rate, which can vary depending on where the purchaser lives but generally hovers around 5.75%.

For businesses, use tax applies to equipment, supplies, or materials purchased from out-of-state suppliers that are not charged Ohio sales tax. Businesses are obligated to keep accurate records of their use tax liabilities and report them accordingly. Typically, businesses file use tax returns either monthly or annually, depending on the amount of tax owed.

To comply with Ohio's use tax laws, residents and businesses must file returns using forms provided by the Ohio Department of Taxation. Individuals can report and pay use tax using the Ohio IT 1040 tax return, whereas businesses often use the Universal Sales Tax Return (UST-1).

Being aware of how much is Ohio's sales tax is crucial for both consumers and businesses to ensure compliance with state tax laws. Failure to accurately charge, collect, or remit the appropriate sales tax can result in penalties and interest charges. For businesses, this means maintaining thorough records and timely filing of sales tax returns. For consumers, especially those purchasing from out-of-state vendors, it means being attentive to use tax obligations. With numerous changes and potential increases in tax rates, understanding the current tax regulations helps in better financial planning and adherence to legal requirements.

Understanding and complying with use tax regulations, especially with the complexities of oh sales tax, is crucial for avoiding potential penalties and interest charges. Both individuals and businesses should be diligent in maintaining records of their out-of-state purchases and ensuring that any unpaid sales tax is reported and paid as use tax in Ohio.

To ensure accurate tax reporting and remittance, businesses can rely on an Ohio sales tax calculator. By entering the purchase price and selecting the relevant county, the tool calculates the total sales tax due. This is particularly beneficial for companies processing numerous transactions daily, helping to maintain compliance and avoid potential penalties.

Recent changes to Ohio sales tax

In 2024, Ohio implemented several changes to its sales tax system that differ from the previous year, 2023. The primary adjustments include alterations in tax rates, exemptions, and applicable goods and services. Below are the key changes:

Sales Tax Rate Adjustment: Effective January 1, 2024, Ohio's state-wide sales tax rate increased from 5.75% to 6%. This change aims to generate additional revenue for state projects and address budget deficits. In comparison, the 2023 rate remained steady at 5.75%.

New Exemptions: As of February 1, 2024, Ohio introduced exemptions for certain eco-friendly products to encourage sustainable practices. These exempt items include solar panels, energy-efficient appliances, and electric cars. In 2023, no similar exemptions were in place, meaning these products were subjected to the standard sales tax rate.

Digital Goods and Services: Starting March 15, 2024, Ohio expanded its sales tax to include digital goods and services such as streaming subscriptions, e-books, and app downloads. This is a significant shift from 2023, where digital goods were not taxed, aligning Ohio's policies with several other states.

Local Sales Tax Cap: In a move to support regional development, Ohio adjusted the cap on local sales tax increments. Previously, localities could increase sales tax by a maximum of 2.5% above the state rate. As of April 1, 2024, this cap was raised to 3%. In 2023, local sales tax increases adhered to the 2.5% limit.

Excise and discretionary taxes and other sales tax considerations in Ohio

State Sales Tax

The base state sales tax rate in Ohio is 5.75%. This tax applies to most sales of tangible personal property and certain services.

Special Excise Taxes

Ohio imposes specific excise taxes on particular goods. Here are some examples:

Many individuals and businesses often wonder, what is sales tax in Ohio? The sales tax in Ohio is a consumption tax imposed by the state government on the sale of certain goods and services. This tax is collected by the retailer at the point of sale and subsequently remitted to the state. The primary purpose of the sales tax is to generate revenue for the state which supports public services and infrastructure development. Different localities within Ohio may also impose additional sales tax, making it essential for consumers and businesses to be aware of the applicable rates in their particular area and frequently ask, what is the sales tax in Ohio?

Gasoline (Motor Fuel) Tax: As of 2024, the tax on gasoline is 38.5 cents per gallon. Diesel fuel is taxed at 47 cents per gallon.

Cigarette Tax: Ohio imposes a tax of $1.60 per pack of 20 cigarettes. Other tobacco products are also taxed, often at a percentage of the wholesale price.

Alcohol Tax: There are various tax rates depending on the type of alcoholic beverage. For example, there is a $3.38 per gallon tax on liquor.

Discretionary Local Sales Taxes

County/Transit Sales Taxes: Counties and regional transit authorities in Ohio have the option to levy additional sales taxes. These local taxes are added to the state base rate. Combined rates can vary significantly depending on the specific location. The total sales tax rate in any given locality can range from 6.5% to 8%.

Other Sales Tax Considerations

Exemptions: Certain items are exempt from sales tax, including prescription drugs, most groceries, and medical equipment. There are also occasional "sales tax holidays" where specific goods can be purchased tax-free.

Use Tax: Ohio imposes a use tax on the storage, use, or consumption of tangible personal property or services purchased out of state but used in Ohio, at the same rate as the sales tax.

Online/Remote Sales: Following the South Dakota v. Wayfair decision, Ohio requires remote sellers with more than $100,000 in gross sales or 200 separate transactions in the state to collect and remit sales tax at the respective Ohio sales tax rate.

Understanding nexus in Ohio for local and out-of-state sellers

Physical nexus

The notable changes between 2023 and 2024 largely revolve around specific revenue and activity thresholds, reflecting efforts to encompass a broader range of economic activities and fine-tune the nexus determination process.

2023

In 2023, Ohio's physical nexus for sales tax largely depended on tangible presence factors including property, employees, or inventory within the state. Ohio established nexus if:

• Businesses had an office, warehouse, or retail location.
• Businesses employed individuals or representatives conducting business on its behalf within Ohio.
• Companies stored inventory in Ohio, including inventory in third-party warehouses or fulfillment centers.
• Businesses had company-owned vehicles operated within the state.

2024

• Businesses maintaining any physical location, such as an office or warehouse, remain subject to sales tax.
• Employing staff or representatives within the state continues to create nexus, but the threshold for triggering nexus has been adjusted to a minimum of $100,000 in annual sales revenue generated within Ohio.
• Holding inventory within the state still creates nexus, but clarification now includes minimum inventory value thresholds of $50,000.
• Transport and delivery mechanisms have been updated, requiring businesses operating company-owned vehicles to track and report sales directly tied to in-state delivery activities if they exceed 25 deliveries within a tax year.

Economic nexus

In 2024, Ohio maintains its established economic nexus rules from 2023, with no significant changes in thresholds, obligations, or exemptions:

Threshold for Economic Nexus

2023: Retailers are required to collect sales tax if their gross sales in Ohio exceed $100,000 or they make at least 200 separate transactions in the state.

2024: The threshold remains the same, with retailers needing to meet either the $100,000 gross sales or 200 transaction criteria.

Marketplace Facilitators

2023: Marketplace facilitators are mandated to collect and remit sales tax if the above economic nexus thresholds are met.

2024: The rule remains unchanged, with the same criteria applying to marketplace facilitators.

Remote Sellers

2023: Remote sellers with no physical presence in Ohio must comply with sales tax rules if they meet the economic nexus threshold.

2024: This obligation continues, with no changes in the criteria for remote sellers.

Reporting and Compliance

2023: Businesses meeting the economic nexus criteria are required to obtain a seller's permit, collect the appropriate sales tax, and file periodic tax returns.

2024: Reporting and compliance requirements remain the same, with no modifications to filing frequency or seller's permit prerequisites.

Exemptions and Exclusion

2023: Certain sales remain exempt from sales tax, such as prescription medications and groceries.

2024: There are no significant changes to the exemptions and exclusions, maintaining consistency in what transactions are non-taxable.

Affiliate nexus

In 2024, Ohio's affiliate nexus laws for sales tax have undergone some changes compared to 2023.

Economic Thresholds

2023: Sellers with gross receipts from sales of $100,000 or 200 separate transactions in Ohio were required to collect sales tax.

2024: The threshold has increased to $150,000 in sales but retains 200 transactions.

Affiliate Relationships

2023: Sellers with affiliates in the state that share similar branding, or that assist in maintaining a marketplace presence, had to collect tax.

2024: The language has been refined to include affiliates that conduct activities "on behalf" of the seller, encompassing a broader range of activities.

Referral Programs

2023: Sellers engaged in referral programs where in-state participants drew customers had a nexus.

2024: This remains unchanged, but the monitoring and enforcement mechanisms have been strengthened.

Click-Through Nexus

2023: Sellers that generate over $10,000 in sales through in-state click-through agreements were required to collect sales tax.

2024: The sales threshold via click-through nexus has been raised to $15,000.

Remote Employees

2023: Having even one remote employee in Ohio who performs any form of business activity triggered a nexus.

2024: The definition has been clarified to include temporary contractors and emphasize significant business activities.

Fulfillment Centers

2023: Utilizing third-party fulfillment centers in Ohio created nexus.

2024: This principle holds but now explicitly includes drop shipping arrangements.

Marketplace Facilitators

2023: Marketplace facilitators with sales exceeding $100,000 or more than 200 transactions had to collect and remit sales tax.

2024: The sales threshold for facilitators has been raised to $150,000, matching the economic threshold for sellers.

Click-through nexus

In Ohio, the concept of click-through nexus in 2024 refers to the criteria that establish whether an out-of-state seller must collect and remit sales tax based on affiliate referrals.

Changes in 2024 compared to 2023 for Ohio's click-through nexus for sales tax include:

Threshold Adjustments: In 2023, Ohio required out-of-state sellers to collect sales tax if their gross sales exceeded $100,000 or had 200 separate transactions in-state. In 2024, this threshold is increased to $150,000 in gross sales or 300 separate transactions.

Affiliate Definition: Up to 2023, click-through nexus applied to affiliates maintaining a physical presence within the state. In 2024, the definition expands to include any digital marketing presence such as Ohio-based influencers promoting products.

Attribution Rule Changes: In 2023, sales attributed to in-state affiliates counted towards nexus thresholds if the affiliate received a commission. In 2024, indirect compensation models like barter arrangements also count towards creating nexus.

Compliance Deadlines: In 2023, affected businesses had 90 days from the date of crossing the threshold to comply with sales tax collection. The 2024 rule reduces this period to 60 days to expedite tax compliance.

Audit Provisions: Audit practices in 2023 required businesses to maintain detailed records for five years. In 2024, stricter documentation requirements for affiliate relationships and sales data are imposed, with penalties for non-compliance.

Marketplace Facilitators: The 2023 regulations made marketplace facilitators responsible for tax collection if they crossed thresholds. In 2024, facilitators must comply with additional reporting requirements for third-party sellers exceeding $100,000 in annual sales.

Penalty Structures: Penalties for non-compliance in 2023 were tier-based on the amount of tax unpaid. For 2024, new penalty structures include punitive fines and interest for categories of late filings or deliberate under-reporting, making compliance more stringent.

Marketplace nexus

Ohio's marketplace nexus for sales tax in 2024 includes several changes compared to 2023:

Threshold for Remote Sellers: In 2023, remote sellers were required to collect Ohio sales tax if they had gross receipts of more than $100,000 or at least 200 separate transactions in the current or previous calendar year. In 2024, the threshold for gross receipts has increased to $125,000, while the transaction threshold has remained the same.

Marketplace Facilitators: In 2023, marketplace facilitators were responsible for collecting and remitting sales tax if their total Ohio sales exceeded $100,000 or 200 transactions. In 2024, the sales threshold for marketplace facilitators is also raised to $125,000 in gross receipts, with no change in the transactions threshold.

Local Tax Rates: Local tax rates in Ohio have seen slight adjustments in 2024 to account for new infrastructure projects. In 2023, local tax rates varied from 0.75% to 2.25%. In 2024, these rates range from 0.75% to 2.5%, depending on the jurisdiction.

Tax Reporting Requirements: In 2023, both remote sellers and marketplace facilitators had to file monthly or quarterly sales tax returns based on their sales volume. In 2024, there's more flexibility; businesses with sales under $250,000 annually can now opt for annual filing, while those exceeding $250,000 must continue monthly or quarterly filing.

Exemptions and Deductions: The list of exempt items and services in 2023 included necessities like groceries, certain medical equipment, and services like healthcare. In 2024, Ohio has expanded deductions to incorporate more environmentally friendly products and renewable energy equipment.

Trade shows

In Ohio, trade shows in 2024 come with specific sales tax obligations for exhibitors and vendors, leading many to ask how much is sales tax in Ohio. Key points include:

• Vendors participating in trade shows must register for a vendor's license if they make taxable sales in Ohio.
• Sales tax must be collected on tangible personal property and certain services sold during the show unless the buyer provides a valid exemption certificate.
• Vendors must remit collected sales tax to the Ohio Department of Taxation by the reporting deadline, typically monthly or quarterly based on the vendor's sales volume.
• Temporary vendor's licenses are available for those participating in limited events or shows.
• Documentation for all sales, including tax-exempt transactions, must be meticulously maintained.
• Failure to comply with sales tax regulations may result in penalties or interest on unpaid taxes.
• Local sales tax rates may vary and vendors should be aware of the tax rate applicable to the location of the trade show.
• Multi-state vendors should consider the Streamlined Sales Tax Governing Board for simplified tax collection processes.
• Post-event, vendors are advised to reconcile their accounts to ensure all sales tax has been accurately reported and paid.
• Specific guidance for trade show vendors is provided by the Ohio Department of Taxation and should be reviewed for compliance.

Fulfillment by Amazon and nexus

Fulfillment by Amazon (FBA) is a service where Amazon handles storage, packaging, and shipping of products for sellers. Sellers send their inventory to Amazon's fulfillment centers, and Amazon takes care of the logistics, including customer service and returns.

2024 FBA Sales tax in Ohio in 2024

Economic Nexus Threshold: Sellers must register for a sales tax permit if their gross sales to Ohio exceed $100,000 or they have 200 or more separate transactions in the state annually.

Inventory Within the State: Using FBA means your inventory might be stored in Amazon's Ohio warehouses, creating a physical nexus, obligating you to collect and remit Ohio sales tax.

Marketplace Facilitator Law: As of recent law, Amazon, being a marketplace facilitator, is required to collect and remit sales tax on behalf of third-party sellers.

Seller's Responsibility: Even with Amazon's collection responsibilities, sellers need to understand their tax obligations, maintain proper documentation, and stay compliant with Ohio tax laws.

Permits, certificates and sales tax registration in Ohio

To register for sales tax in Ohio in 2024, businesses must first obtain a Vendor’s License. This involves providing essential information such as business name, address, and federal tax identification number. Registration can be completed through the Ohio Business Gateway or at the local county auditor's office.

Once registered, businesses are required to collect and remit sales tax on taxable transactions to the state.

Registering for sales tax collection in Ohio

To register for sales tax collection in Ohio in 2024, you need to follow these steps:

Determine if You Need to Register: First, determine if your business activities require you to collect sales tax. Generally, if you sell taxable goods or services in Ohio, you'll need to collect sales tax.

Gather Information: Before beginning the registration process, gather necessary information about your business, including your federal Employer Identification Number (EIN), business name, contact information, and details about the types of sales you make.

Online Registration:

• Go to the Ohio Business Gateway (OBG) website. The OBG is the portal for business filings and registrations in Ohio.
• Create an account if you don’t have one. You'll need a valid email address to sign up.
• Log in to your OBG account and select the option to register for a vendor’s license.
• Follow the prompts to complete the registration form, providing information about your business and the type of sales tax permit you need (regular vendor's license, transient vendor's license, etc.).

Pay the Registration Fee: Depending on the type of vendor's license you are applying for, there may be a registration fee. For example, a regular vendor’s license typically has a fee of around $25. Ensure you provide payment information to cover this fee when prompted.

Confirmation and Documentation: Once you submit your registration form and pay the fee, you will receive a confirmation. Keep this confirmation for your records. You will also receive your vendor’s license, which you should keep in a safe place.

Set Up Collection and Reporting Systems: After registering, set up your systems to collect sales tax on taxable transactions. Ensure you understand how to properly collect, record, and remit sales tax to the Ohio Department of Taxation.

File Sales Tax Returns: Once registered, you are required to file sales tax returns periodically. The filing frequency (monthly, quarterly, or semi-annually) will depend on your business’s sales volume. Be sure to file these returns on time to avoid penalties.

Stay Informed: Stay updated on any changes in Ohio sales tax laws and regulations to ensure ongoing compliance.

Cost of registering for sales tax in Ohio in 2024

For 2024, the cost to register for a sales tax permit in Ohio is generally $25. This fee is a one-time cost for obtaining a Sales Tax Vendor's License.

However, there may be different types of vendor's licenses based on the nature of your business (e.g., transient vendor's license, county vendor's license, etc.), but the fee structure remains similar.

Federal tax ID requirements for registering

Whether you need an Employer Identification Number (EIN) to register for sales tax in Ohio depends on the structure of your business. Here are the general guidelines:

EIN Requirement

Sole Proprietorship without Employees: Generally, if you are operating as a sole proprietorship and do not have any employees, you may not need an EIN. You can use your Social Security Number (SSN) instead.

Businesses with Employees, Corporations, Partnerships, and LLCs: You will need an EIN for your business if you have employees or if your business structure is a corporation, partnership, or an LLC.

Registering for Sales Tax in Ohio

If you determine you need an EIN, you can apply for one through the IRS. This can be done online, and you will receive your EIN immediately upon completion of the application.

IRS EIN Online Application: Apply for an EIN

Ohio Sales Tax Registration

After obtaining your EIN (if needed), you will need to register for an Ohio Sales Tax Permit. This process can be completed online through the Ohio Business Gateway.

Ohio Business Gateway: Ohio Business Gateway

When you visit the Ohio Business Gateway, you will be required to create an account if you do not already have one, and then you can follow the steps to register for a sales tax permit.

Make sure to have all your business information handy, including your EIN if your business structure requires it.

Streamlined sales tax program and Ohio

Yes, Ohio is a part of the Streamlined Sales Tax (SST) program. The Streamlined Sales Tax Agreement is a multi-state effort to simplify and modernize sales tax administration to reduce the burden of tax compliance. States that are part of the SST program agree to adhere to uniform tax rules and administrative procedures. Ohio is one of the states that has been participating in this program to facilitate easier sales tax management for both businesses and the state itself.

Acquiring a business and registering for sales tax in Ohio

If you're acquiring a business in Ohio and need to register for sales tax, you'll generally need to follow these steps:

Obtain an Employer Identification Number (EIN): Before registering for sales tax, you need to have an EIN from the IRS. This number is used to identify your business for tax purposes.

Complete the Ohio Business Gateway Registration: You must register your business with the Ohio Business Gateway. This registration typically involves providing information about your business, including your EIN, business name, type of business entity, and business address.

Sales Tax Vendor's License Application: You will need to apply for a Vendor’s License through the Ohio Department of Taxation. This can be done online via the Ohio Business Gateway or in person at your local county auditor’s office. There are different types of Vendor’s Licenses, such as a regular Vendor’s License or a transient Vendor’s License, depending on how your business operates.

Pay the Required Fees: There is usually a fee associated with obtaining a Vendor’s License. The cost may vary depending on the type of license and possibly the location.

Understand Your Filing Requirements: Once registered, it's important to understand your ongoing responsibilities, such as collecting sales tax on taxable sales, filing sales tax returns, and remitting the collected sales tax to the state by the appropriate deadlines.

Keep Records: Maintain accurate records of all sales, the sales tax collected, and the sales tax you have remitted to the state. This is important for compliance and in case of an audit.

Other Ohio registrations to consider

In Ohio, aside from obtaining a sales tax permit, there are several other registrations and considerations you may need to address depending on the nature of your business. Here are some key ones:

Commercial Activity Tax (CAT): If your business has gross receipts of over $150,000 per calendar year, you need to register for and pay this tax.

Employer Identification Number (EIN): If you have employees or operate as a corporation or partnership, you need to obtain an EIN from the IRS.

Ohio Business Gateway Registration: This is a portal where you can register your business, file forms, and get permits. It is often one of the first steps in establishing a business in Ohio.

Withholding Tax Account: If you have employees, you will need to register for an Ohio withholding tax account to handle the income taxes you withhold from employees' paychecks.

Unemployment Compensation: You will also need to set up an unemployment compensation account with the Ohio Department of Job and Family Services if you have employees.

Workers' Compensation Coverage: Ohio requires businesses with employees to have workers' compensation insurance through the Ohio Bureau of Workers' Compensation (BWC).

Local Permits and Licenses: Depending on your business location and type, you may need additional permits or licenses from your city or county.

Vendor's License: Specific to businesses making sales, you need to acquire a vendor's license, which is required to collect and remit sales tax.

Department of Taxation Registration: If you're dealing with special taxes (like alcohol, tobacco, motor fuel), additional registration with the Ohio Department of Taxation might be required.

Professional Licenses: Certain professions require state-specific professional licenses (e.g., doctors, lawyers, real estate agents).

Requirements for online sellers in Ohio

In Ohio, online sellers are required to collect and remit sales tax if they have a substantial nexus in the state. Given these conditions, online sellers must obtain a vendor's license and are responsible for collecting and remitting sales tax on taxable sales made to Ohio residents.

As of 2024, this generally means that if an online seller has either of the following:

Physical Presence Nexus: Any form of physical presence in Ohio, such as an office, store, warehouse, or even employees working within the state.

Economic Nexus: Sales exceeding $100,000 or 200 or more separate transactions into Ohio during the current or previous calendar year.

Collecting sales tax in Ohio

Collecting sales tax in Ohio in 2024 involves understanding the state's tax regulations, registering for a vendor's license, and accurately calculating the 5.75% state sales tax rate, along with any applicable county and transit taxes.

Compliance ensures proper remittance to the Ohio Department of Taxation.

Understanding origin vs. destination sales tax collection

Ohio is a destination-based sales tax state. This means that sales tax rates are determined by the location where the buyer takes possession of the purchased item, which is typically the buyer's shipping address. Therefore, businesses must collect and remit sales tax based on the rates applicable in the jurisdiction where the product is delivered.

For detailed and updated information, refer to the Ohio Department of Taxation's website: https://tax.ohio.gov

Taxable products in Ohio

In the state of Ohio, certain product genres are subject to sales tax. Here's an overview of the main categories that typically incur sales tax:

Tangible Personal Property: Most tangible personal property, including electronics, furniture, appliances, clothing, and vehicles, is subject to sales tax.

Digital Goods and Services: Digital products such as e-books, music downloads, and streamed media services (e.g., movies, TV shows) are generally taxable.

Prepared Food and Beverages: Restaurant meals, take-out food, and beverages prepared for immediate consumption incur sales tax.

Software: Pre-packaged and custom software delivered electronically or on physical media is taxable.

Certain Services: Some services, like personal care services (haircuts, nail salons), pet grooming, and landscaping services, may be subject to sales tax.

Utilities and Telecommunications: Utility services (like electricity and gas) and telecommunications services (including internet, cable TV, and mobile phone services) are generally taxable.

Rental or Leasing: The rental or lease of tangible personal property, such as cars, tools, or machinery, is subject to sales tax.

Use Tax: If you purchase goods or services outside Ohio and bring them into the state for use, you may owe a use tax, which is essentially equivalent to the Ohio sales tax.

Non-taxable products in Ohio

In Ohio, there are several product categories that are exempt from sales tax. These typically include:

Food: Most food items for human consumption off-premises are exempt. This includes groceries but not prepared foods intended for immediate consumption.

Prescription Medications and Medical Supplies: Prescription drugs, some medical equipment, and other medical supplies are often exempt.

Certain Utilities: Residential utility services such as water, gas, and electricity are generally exempt from sales tax.

Newspapers and Magazines: Printed newspapers are exempt, while digital versions may be subject to tax.

Agricultural Products: Items like seeds, fertilizers, and certain types of equipment used for agricultural purposes may also be exempt.

Clothing: Ohio hosts a "sales tax holiday" usually in August, during which certain clothing and school supplies are exempt from sales tax.

Is SaaS taxable in Ohio?

In Ohio, as of 2024, Software as a Service (SaaS) is considered a taxable service.

This means that businesses providing SaaS are required to charge sales tax on their subscription fees and services to customers within the state.

Are digital products taxable in Ohio?

In Ohio in 2024, digital products are generally taxable.

Items such as digital books, movies, music downloads, and subscription services are subject to sales tax. As with physical goods, these digital products must comply with state tax regulations and consumers can expect to pay applicable taxes at the point of purchase.

Are services taxable in Ohio?

In Ohio, most services are generally not subject to sales tax.

However, certain exceptions exist, including specific professional, personal, and entertainment services which are taxable. For example, lawn care, janitorial services, and some digital services are subject to taxation.

Sales tax exemption certificates

In Ohio, a sales tax exemption certificate is used by purchasers to claim exemption from paying sales tax on certain goods and services. To obtain such an exemption, the purchaser must provide a valid certificate to the seller at the time of transaction.

The exemption applies to qualified businesses and organizations such as resellers, manufacturers, and non-profits. The certificate must include specific information such as the purchaser's name, address, reason for exemption, and tax identification number. Sellers are responsible for retaining these certificates for auditing purposes.

Misuse or fraudulent use of exemption certificates can result in penalties and back taxes.

State tax holidays in Ohio for 2024

Sales tax holidays are specific periods when sales taxes are waived or reduced on particular items to encourage consumer spending.

In Ohio for 2024, there are no scheduled sales tax holidays.

Filing sales tax returns in Ohio

Filing Sales Taxes in Ohio

Determine Filing Frequency: Based on your business's taxable sales volume, determine if you must file monthly, semi-annually, or annually.

Register for a Vendor’s License: Obtain a vendor’s license to collect and remit sales tax; this can be done online via the Ohio Business Gateway.

Collect Sales Tax: Charge the state sales tax rate of 5.75% plus any applicable local sales taxes to customers at the point of sale.

Maintain Accurate Records: Keep detailed records of all sales transactions and the amount of tax collected to ensure accurate reporting.

Calculate Taxable Sales: Tally up the total sales subject to sales tax for the reporting period.

File Sales Tax Return: Calculate the total sales tax collected and file the return via the Ohio Business Gateway or by mail using Form UST 1.

Remit Payment: Pay the sales tax due by the filing deadline to avoid penalties and interest; payments can be made online or via check.

Claim Discounts for Timely Filing: If you file and pay on time, you may be eligible for a discount on the tax due.

Correct Errors: If you discover errors after filing, submit an amended return to correct the information.

Keep Up with Changes: Stay informed about changes in tax rates or filing requirements by regularly checking updates from the Ohio Department of Taxation.

Sales tax filing frequency

In Ohio, businesses are required to file sales tax returns at various intervals based on their sales tax liability. The frequency of filing can be classified into three main categories: monthly, quarterly, and semi-annual.

Monthly Filing

Businesses that collect a significant amount of sales tax, defined as more than $200 per month, are generally required to file their returns on a monthly basis. This ensures that the state receives the collected taxes in a timely manner, helping to manage cash flow and budgetary needs. Monthly returns are due on or before the 23rd day of the month following the reporting period.

Quarterly Filing

For businesses with a moderate sales tax liability, specifically those collecting between $200 and $1,200 per year, quarterly filings may be sufficient. This group must file their returns by the 23rd day of the month following the end of each quarter. Therefore, businesses would submit their returns in April, July, October, and January.

Semi-Annual Filing

Businesses with a relatively small sales tax liability, less than $200 per year, are typically allowed to file on a semi-annual basis. These returns are due on or before the 23rd day of the month following the end of the semi-annual period, which are the months of July and January.

It is important for businesses to monitor their sales tax liabilities closely and file the correct type of return, as failure to comply with the designated filing periods may result in penalties, interest, and potential audits from state tax authorities.

Filing when no sales tax has been collected

In Ohio, if a business registered for sales tax fails to collect it, the state may impose penalties and interest on the uncollected tax amount. This includes financial penalties for non-compliance, potential audits, and additional scrutiny from the Ohio Department of Taxation.

The business owner may also be required to pay the unpaid taxes out of pocket, risking further financial strain. Persistent failure to comply can lead to license revocation or legal action.

Penalties for late filing and non-payment of sales taxes

In 2024, businesses in Ohio must adhere to stringent sales tax regulations, including timely filing and payment. Late filing of sales tax returns can lead to significant penalties.

If a business files its sales tax return after the due date, it may incur a penalty of $50 or 10% of the tax due, whichever is greater. Continuous non-filing can result in additional penalties and interest accumulation on the unpaid taxes, increasing the financial burden on the business.

Non-payment of sales taxes is a serious infraction in Ohio. If businesses fail to remit the collected sales taxes, they are liable for both civil and criminal penalties. Civil penalties can include fines, interest on the overdue amount, and potential liens on business or personal property. Criminal charges may be pursued in cases of intentional tax evasion, which can lead to misdemeanor or felony charges, resulting in substantial fines and possible imprisonment.

To avoid these severe consequences, businesses are advised to implement strong accounting practices and ensure timely and accurate sales tax remittance. Proactive measures, such as consulting with tax professionals and utilizing automated tax software, can help in maintaining compliance with Ohio's sales tax laws.

Sales tax discounts and incentives

In 2024, Ohio offers several sales tax incentives and discounts designed to benefit businesses. These incentives aim to stimulate economic growth and encourage business investments within the state. Key aspects of these incentives include:

Manufacturing Exemption: Ohio provides a sales tax exemption on purchases of machinery, equipment, and supplies used primarily in manufacturing or processing products for sale. This also extends to repairs and maintenance services for such equipment.

Warehouse and Distribution Center Exemption: Businesses that operate warehouse or distribution centers in Ohio can benefit from exemptions on purchases of equipment and supplies necessary for their operations. This includes racking systems, forklifts, and other material handling equipment.

Research and Development (R&D) Exemption: Ohio encourages innovation by offering sales tax exemptions on tangible personal property used in research and development activities. This helps lower the costs for businesses engaged in creating new products or improving existing ones.

Energy Exemption: Purchases of energy (such as electricity and natural gas) used in manufacturing, mining, refining, or farming are exempt from sales tax. This incentive helps reduce operational costs for energy-intensive businesses.

Data Center Tax Exemption: For businesses that invest in large data centers within Ohio, there are exemptions available on the purchase of equipment such as servers, storage devices, and cooling systems. This is part of Ohio's strategy to attract technology firms and large-scale data operations.

2024 sales tax filing due dates for Ohio

Coming soon.

Shipping and sales tax in Ohio

When to pay tax on shipping in Ohio

In Ohio, businesses are required to charge sales tax on shipping and handling fees if the shipment is associated with a taxable sale. Specifically, if the products being sold are subject to sales tax, then any charges for shipping and handling are also taxable, even if these charges are stated separately.

However, if the items being sold are not subject to sales tax, then the shipping and handling charges are likewise not taxable.

Key Points

Taxable Goods: If the sale itself is subject to Ohio sales tax, then the shipping and handling charges are also subject to sales tax.

Non-Taxable Goods: If the items being shipped are exempt from sales tax, then the shipping charges are also exempt.

Mixed Shipments: If an order includes both taxable and non-taxable goods, the shipping and handling charges should be pro-rated between the taxable and non-taxable items to determine the taxable portion of the shipment cost.