Ohio Sales Tax
Ohio Sales Tax At a Glance
State rate: 5.75%
Maximum combined rate: 8%
Sourcing: Origin
Tax Holidays: Back to School
Governing Body: Ohio Department of Taxation
Whether you’re planning to open a physical store or office in Ohio, or you’re selling goods online to Ohio customers, you need to know whether to collect and remit Ohio state sales taxes and at what rate. Of course, one determining factor in this equation is whether or not what you’re selling is subject to sales taxes. If it is, you’ll need to determine if you have a sales tax nexus in the state so that you can apply for the appropriate licenses to collect it.
Sales Tax Rates in Ohio
The state sales tax rate in Ohio is 5.75%. In addition to this, counties and local transit authorities are permitted to levy their own taxes in increments of 0.25% up to a total of 3%. While this means that the applicable sales tax rate can vary considerably from one zip code to another, it also means that the total sales taxes will never exceed 8.75%.
The Ohio Department of Taxation provides several resources for helping to determine what rates are applicable in various parts of the state. For instance, you can use their website to look up rates for any Ohio address or consult an updated list of rates for all jurisdictions in the state in alphabetical order.
Because Ohio is an origin-based state, the rate you’ll need to charge your customers will be the one at the site of your physical store or at the location you shipped from if you’re an Ohio-based business. If your business is based out-of-state but you still have a nexus in the state through some other means, the tax rate you should assess will be that at the destination address of the shipment. It’s also important to note that shipping and delivery charges on taxable purchases in Ohio are also taxable.
Ohio Sales Tax Nexus Regulations
Of course, you don’t have to worry about Ohio state sales tax at all unless you have a significant presence or nexus there. For the purposes of assessing sales tax responsibility, Ohio considers a seller to have a nexus if they:
- Have a physical place of business in the state, whether operated directly by the seller or by an affiliated group.
- Are represented by agents, employees, technicians, or any other individual who conducts their business within the state.
- Maintain a presence in the state in the form of an employee or agent who receives or processes orders.
- Make deliveries into the state that are not through a common carrier.
- Are the owner of tangible personal property that is rented or leased by a customer in Ohio.
- Own, maintain, leases, rents, or has the right to use property located within Ohio.
- Are registered to make sales to customers in the state with the appropriate state agency.
As in many states, this combination of regulations comes to mean that if you store your goods in a warehouse in the state, you must collect and remit sales tax from your Ohio customers. For anyone using fulfillment through Amazon, this will apply in Ohio due to the presence of two fulfillment centers in the state.
Economic Nexus in Ohio
Ohio has also adopted an “Economic Presence Standard” requiring out-of-state sellers who make significant sales in Ohio to collect and remit sales tax. Within the previous calendar year, if your small business has gross receipts in Ohio of $100,000 or more, or if you make 200 or more sales in Ohio, you must register for sales tax compliance collection.
Taxable Goods and Services in Ohio
Most sales of tangible personal property are subject to sales tax in Ohio, with some notable exceptions. These exceptions include:
- Groceries, or any other food purchased with the intent of being prepared and consumed at home. This does not include alcoholic beverages, soft drinks, or dietary supplements.
- Prescription medications and durable medical equipment
- Meals served to students
- Newspapers
- Sales to churches and certified charitable organizations
- Purchases made with food stamps
Sales of tangible personal property are also not taxable if the consumer intends to utilize the goods purchased in the manufacture of tangible personal property for resale through some type of manufacturing or refining process.
Quite a few types of services are taxable in Ohio as well. These include:
- Laundry and dry cleaning
- Repair and installation, unless the equipment being worked on is not taxable
- Recreation and physical fitness
- Washing, polishing, and painting of motor vehicles
- Landscaping
- Extermination
- Personal care, except hair care
- Transportation, except via public transportation or commercial airlines
The expansion of sales tax to include at least some services is an increasing trend across the states, and it’s likely to expand as the share of the economy that services make up continues to grow.
Registration and Filing
Before you collect sales tax from any customers in Ohio, you have to obtain a vendor’s license from the state. You can do this in a couple of different ways, and there are several types of licenses to choose from as well. If you will be operating a physical store or office, you can apply for a vendor license either through the Ohio Business Gateway or by contacting the local county auditor in your area directly. Each location you operate in Ohio must have its own license, and the licensing fee is $25.
Other types of licenses include:
- Transient Vendor – $25; for retailers who make sales in various locations throughout the state and transport their goods to and from those locations.
- Seller – No Fee; for retailers outside the state who make sales to customers within Ohio.
- Direct Pay Permit Holder – No Fee; primarily for manufacturers or similar who purchase items with questionable taxable status at the time of purchase. That tax can later be paid directly to the state.
It’s important that you obtain the correct type of license before you begin making sales, and the applications can be easily completed through the Ohio Department of Taxation website, although an offline application process still exists as well. Filing of sales tax returns must be done online, however, with payment options available in the form of ACH debit or credit card.
Due Dates and Penalties
Based on the results of a tax calculator, determine what your liability will be. Returns must be filed and payments made by the 23rd of the month following that in which the tax was collected. Any taxpayer whose annual liability exceeds $75,000 must pay monthly. Direct pay permit holders can pay quarterly if they have less than $15,000 in tax liability per quarter on average. Vendors, sellers and transient vendors can pay semi-annually if their average six-month tax liability is less than $1,200.
Monthly Due Dates
| Period | Due Date |
|---|---|
| January | February 23 |
| February | March 23 |
| March | April 23 |
| April | May 23 |
| May | June 23 |
| June | July 23 |
| July | August 23 |
| August | September 23 |
| September | October 23 |
| October | November 23 |
| November | December 23 |
| December | January 23 |
Quarterly Due Dates
| Period | Due Date |
|---|---|
| January – March (Q1) | April 23 |
| April – June (Q2) | July 23 |
| July – September (Q3) | October 23 |
| October – December (Q4) | January 23 |
Semi-annual payments are due on July 23rd for the period running from January through June, and on January 23rd for the period running from July to December of the previous year. Zero returns are required in Ohio, so if you hold a license from the state that permits you to collect sales tax, you must file a return even if you owe no tax for the period in question.
If you fail to file or pay your sales taxes on time, you will be assessed a penalty of $50 or 10% of the total sales tax compliance due, whichever is more, up to 50% of total tax due on each delinquent return. A fee of $50 will also be assessed for every returned check, and interest may be added on to late tax payments as well.
There is a discount rate of 0.75-1% of tax liability for filers who file and pay in full on time.
Resources
Ohio State Sales Tax Software
Making sure you’ve appropriately collected sales tax on purchases made by your customers in Ohio, as well as remembering to file your return and make timely payments can add significantly to the complexity of running your small business. That challenge is only multiplied when you sell in multiple states, each of which have their own sales tax rates and regulations. Fortunately, software exists to help you manage all of these variables, and TaxTools is just such a program.
With the tax calculator and features TaxTools provides, you can stay on top of any changes to local and state tax regulations, quickly pull up all tax collection and payment histories, complete with location information and rate charged. You can also integrate this software seamlessly with whatever eCommerce platform you currently use, making it only an asset when it comes to streamlining your business operations. If you’re interested in learning more about how TaxTools can help you stay on top of all state and local sales tax collection and filing, both in Ohio and elsewhere, click here to sign up for a free trial today.
Last updated August 2023