Ohio Adopts a 2.75% Income Tax Rate for 2026
The top bracket disappears, but the $26,050 no-tax threshold and a base tax remain part of the calculation.
Ohio begins 2026 with a single flat income tax rate of 2.75% for nonbusiness income, eliminating the 3.125% top bracket used in 2025. The change took effect January 1 under House Bill 96, which Governor Mike DeWine signed June 30, 2025. It completes the law's two-step reduction of the former 3.50% top rate.
Lawmakers presented the move to a flat tax as an economic competitiveness measure. A June 25 announcement from House Speaker Matt Huffman and Finance Chairman Brian Stewart said the change would make Ohio more competitive with surrounding states and simplify the tax code.
Nonbusiness income is Ohio's term for wages and other income that falls outside its separate business income tax rules. Individuals still owe no state tax on taxable nonbusiness income of $26,050 or less. Above that threshold, a base tax remains part of the calculation, so the new rate alone does not describe the full tax bill.
One Rate Replaces the Two Taxable Brackets
The table below compares Ohio's 2025 and 2026 nonbusiness income tax rates across the same income ranges. The Ohio Department of Taxation's 2025 instructions show two taxable brackets, with the higher rate applying above $100,000. For 2026, that higher rate falls to 2.75%, matching the rate below it.
| Taxable Nonbusiness Income | 2025 | 2026 |
|---|---|---|
| Up to $26,050 | 0% | 0% |
| Over $26,050 to $100,000 | 2.75% | 2.75% |
| Over $100,000 | 3.125% | 2.75% |
The table shows the rates, while the full calculation also includes a fixed dollar amount. For 2026, individuals with taxable nonbusiness income above $26,050 owe $332 plus 2.75% of the amount over $26,050, before credits. The threshold therefore is not a $26,050 deduction that everyone can subtract before applying the rate.
How Much Does the New Schedule Save?
The following table compares Ohio income tax for 2025 and 2026 at $80,000 and $160,000 of taxable nonbusiness income for single filers. Both examples hold income constant after Ohio adjustments and personal exemptions, exclude credits and local taxes, and include the required base tax. Dollar amounts are rounded independently, with savings and percentages calculated before rounding.
| Taxable Income | 2025 | 2026 | Savings | Savings % |
|---|---|---|---|---|
| $80,000 | $1,826 | $1,816 | $10 | 0.5% |
| $160,000 | $4,269 | $4,016 | $254 | 5.9% |
At $80,000, the rate on income above $26,050 stays at 2.75%. The $10 saving comes from reducing the base tax from $342 to $332. At $160,000, the taxpayer also benefits from the lower rate on income above $100,000, bringing the total saving to about $254 before credits.
The top rate falls by 0.375 percentage points, but the savings percentage depends on how much income was in that bracket. These taxable-income amounts are not gross salary, and changes in income, exemptions, or credits can alter the final year-to-year result.
Which Tax Year Uses the New Rate?
The new schedule applies to the 2026 tax year, with calendar-year returns generally filed in 2027. Taxpayers estimating their 2026 state tax should use the 2.75% nonbusiness rate and the $332 base amount where applicable. Ohio's separate 3% rate on taxable business income is unchanged, and municipal or school district income taxes may still apply.
Our Ohio income tax rate page explains the calculation and compares single and joint-filing examples. For available Ohio IT 1040 returns and instructions from the Ohio Department of Taxation, visit our Ohio income tax forms page and select the edition for the tax year you are filing.
References:
- Ohio Revised Code Section 5747.02: Tax Rates. Divisions (A)(3)(a)-(c) and (A)(4). Enacted 2024-2026 nonbusiness schedules, no-tax threshold, base amounts, and separate business income rate. Ohio Legislative Service Commission. Retrieved September 25, 2026.
- House Bill 96 Status: 136th General Assembly. June 30, 2025 signing date and legislative history. Ohio General Assembly. Retrieved September 25, 2026.
- Ohio House Passes Budget Plan that Delivers Historic Property Tax Relief for Ohioans, Implements Nation's Second Lowest Income Tax Rate. June 25, 2025. Announcement from Speaker Matt Huffman and Finance Chairman Brian Stewart describing competitiveness and tax-code simplification as reasons for the flat-tax change. Ohio House of Representatives. Retrieved September 25, 2026.
- 2025 Ohio IT 1040 / SD 100 Instructions. Pages 16-18, taxable nonbusiness income and the 2025 rate schedule, including the $342 and $2,394.32 base amounts. Separate school district return guidance also included. Ohio Department of Taxation. Retrieved September 25, 2026.