Tax Reform

Reduce Operating Costs
with the lowest taxes in the Midwest

A business-friendly tax environment is an absolute must in today’s economy. In Ohio, we’re doing something about it. Ohio’s 2005 tax reform has lowered business tax burdens, eliminating taxes on inventory, corporate profit and investments in equipment. Ohio is ranked as one of the top five states with the lowest effective tax rate on new investment.

Ohio’s new taxation system means businesses can:

  • Reduce operating costs – No tax on inventory or corporate income
  • Enhance productivity – No tax on investments in machinery and equipment
  • Attract talent – Shrink labor costs through a 30% reduction in personal income tax
  • Enjoy a level playing field – All companies taxed at the same low rate
  • Boost return on investment – No tax on product sold to customers outside Ohio
  • Reward entrepreneurship – First $1 million in gross receipts are tax-free

Ohio’s tax on new investment
is the lowest in the Midwest

  • Corporate Income Tax – None
  • Corporate Franchise Tax – None
  • Gross Receipts Tax – The Commercial Activities Tax (CAT) is 0.26% on sales within the State of Ohio. Sales outside of Ohio are exempt. The first $1 million in eligible sales are exempt from the CAT.
  • Personal Income Tax – Nine bracket system with a bottom bracket of .0495% for income under $5,250 and a top bracket of 4.997% for income over $210,600. This reflects a 30% reduction since 2005.
  • Small Business Tax Deduction – Owners and investors in Ohio pass-through entities are eligible for a 100% tax deduction on the first $250,000 of business income, with a 3% tax rate on business income in excess of $250,000.
  • Sales and Use Tax – 5.75% on taxable purchases
  • No Sales and Use Tax on Production Machinery & Equipment – Exempt

With these reforms, Ohio and communities like Sidney will become even more competitive. Ohio’s favorable business climate and high quality of living, combined with low business and personal costs, make us an increasingly viable location for business growth.

An Ernst & Young analysis of key manufacturing and service industries in these Midwestern states — Illinois, Indiana, Michigan, Minnesota, and Wisconsin — found that:

  • Ohio’s effective tax rate on new capital investment by manufacturing industries will be 40% lower than the five-state average.
  • Ohio’s effective tax rate on selected service industries will be 29% lower than the five-state average.
  • For all industries studied, Ohio’s effective state and local tax rate is 37% lower than the five-state average.