Reynoldsburg OH Sales Tax:
What Businesses Must Know

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.

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.

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.

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.

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.

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.

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.

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.