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Tool | September 2014

State-by-State Guide to Taxes on Retirees

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Ohio

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The Bottom Line
Map of Ohio

MIXED TAX PICTURE

The Buckeye State exempts Social Security benefits from state income taxes and also allows retirees to claim a tax credit of up to $200 on other types of retirement income. Ohio's income tax rates range from a low of 0.528% to a high of 5.333% on income over $208,500. Real estate is assessed at 35% of its market value, and a residents 65 and older may qualify for a homestead exemption.

State Sales Tax

5.5%. Food, newspapers, magazine subscriptions, telephone service and prescription drugs are exempt. Counties levy additional sales taxes, which can add up to 2.25%.

Income Tax Range

Low: 0.587% (on up to $5,200 of taxable income)

High: 5.925% (on taxable income over $208,500)

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Ohio has four tax credits for retirees. The retirement-income credit is worth $25 to $200, depending on the amount of qualifying retirement income. In addition, seniors 65 and older can qualify for the senior citizen credit, worth $50 per tax return. Retirees can also get a lump-sum distribution credit and a lump-sum retirement-income credit. Taxpayers taking the lump-sum retirement-income credit cannot take the retirement-income credit on current or future returns. Taxpayers taking the lump-sum distribution credit cannot take the $50 senior citizen credit. Military pensions are eligible for a deduction to the extent that income is not otherwise deducted or excluded.

Most Ohio municipalities levy an income tax on residents and those who work within the municipality. Rates range from 0.4% to 3%. But pension income and disability benefits, interest and dividends are exempt. About 30% of school districts also levy an income tax of 0.25% to 2% on residents. The taxing district can opt to tax either “traditional” (Ohio taxable) income or earned income; earned income generally excludes retirement income, interest, dividends and capital gains.

Property Taxes

Property is taxed based on its assessed value, which is 35% of market value. County auditors must reappraise all real estate every six years.

Median property tax on the state's median home value of $134,600 is $1,836, according to the Tax Foundation.

Tax breaks for seniors: A homestead exemption is available for qualified homeowners who are at least 65 years old, permanently and totally disabled, or at least 59 years old and the surviving spouse of a deceased taxpayer who had previously received the exemption. Qualified homeowners are permitted to exempt $25,000 of their home’s market value from all local property taxes. Beginning in 2014, eligibility for new exemptions is limited to qualifying taxpayers (by age) with Ohio adjusted gross income of $30,500 or less; the income threshold will be annually adjusted for inflation. Taxpayers who were already granted the exemption will continue to receive it.

Inheritance and
Estate Taxes

Ohio has no inheritance tax or estate tax.

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