OH
Ohio Small Business Tax Guide
What the Ohio Department of Taxation says about sales tax, the Commercial Activity Tax and business income, with the federal side quoted from the IRS. Educational overview only, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in Ohio before making filing or planning decisions.
Tax landscape for small businesses
State figures below are quoted from the Ohio Department of Taxation, and federal figures from IRS pages, each with the date it was checked.
The department's sales and use tax page (Ohio, checked October 31, 2026) says "When combined with the state rate—which is 5.75 percent—the overall tax rate (state, local, and transit) cannot exceed 8.75 percent." On local rates, it says counties and regional transit authorities "can add sales tax in small increments (multiples of 0.05%) up to a maximum of 3 percent".
The Commercial Activity Tax (CAT) is separate. The department's CAT page (Ohio, checked October 31, 2026) says "For tax years 2025 and forward: Businesses with more than $6 million a year in Ohio TGR need to pay the CAT." and "The CAT is taxed at .26% (.0026) of Ohio Taxable Gross Receipts." It also says "the CAT cannot be separately billed or invoiced to another person to recuperate the taxes paid."
On income, the department's annual tax rates page (Ohio, checked October 31, 2026) says "as of 2016, taxable business income is taxed at a flat rate of 3%."
Worked example, with sample figures: an Ohio sale of $1,200.00 taxed at the "5.75 percent" state rate (Ohio, checked October 31, 2026) carries $69.00 of state tax (1,200.00 × 0.0575), or $1,269.00 before county and transit tax. Add the county rate for the sale; the department says the overall rate can't pass "8.75 percent".
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Sales and use tax, state rate | "5.75 percent" | Department of Taxation sales and use tax page (Ohio, checked October 31, 2026): "When combined with the state rate—which is 5.75 percent—the overall tax rate (state, local, and transit) cannot exceed 8.75 percent." |
| County and transit add-on | "up to a maximum of 3 percent" | Same page (Ohio, checked October 31, 2026): counties and regional transit authorities "can add sales tax in small increments (multiples of 0.05%) up to a maximum of 3 percent". |
| Commercial Activity Tax | ".26% (.0026)" | Department of Taxation CAT page (Ohio, checked October 31, 2026): "For tax years 2025 and forward: Businesses with more than $6 million a year in Ohio TGR need to pay the CAT." "The CAT is taxed at .26% (.0026) of Ohio Taxable Gross Receipts." |
| Business income | "a flat rate of 3%" | Department of Taxation annual tax rates page (Ohio, checked October 31, 2026): "as of 2016, taxable business income is taxed at a flat rate of 3%." |
| Federal self-employment tax | "15.3%" | The IRS self-employment tax page (In the US (federal), last reviewed or updated October 30, 2026): "The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance)." |
Filing requirements
This list isn't a complete checklist for your business.
Commercial Activity Tax returns
The department's CAT page (Ohio, checked October 31, 2026) says "Taxpayers who need to pay this tax must register, file quarterly returns, and make payments." It applies, for 2025 on, as "For tax years 2025 and forward: Businesses with more than $6 million a year in Ohio TGR need to pay the CAT."
County rate changes
The department's sales and use tax page (Ohio, checked October 31, 2026) says "The sales and use tax rate for Warren County (83) will increase from 6.75 % to 7.25 % effective October 1, 2026."
Out-of-state businesses and the CAT
The department's CAT page (Ohio, checked October 31, 2026) says "Even if a business is located in another state, it still has to pay this tax if it has substantial nexus." For a business not based in Ohio, it says "they only have to pay the CAT if they have a “bright-line presence” in the state", one test being "They make $500,000 or more in sales to customers in Ohio". It adds "A business must meet both the bright line presence test and the sales threshold to owe CAT".
Sales tax exemption certificates
The department's exemption certificates page (Ohio, as retrieved on November 1, 2026) describes the STEC U form as "Used to claim an exemption or exception on a single purchase." and the STEC B form as "Used to make a continuing claim of exemption or exception on purchases from the same vendor or seller."
Federal estimated tax
The IRS estimated taxes page (In the US (federal), last reviewed or updated September 25, 2026) says "Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed."
Deductions and write-offs
Confirm with your state how it treats each item.
- Self-employment tax deduction: the IRS (In the US (federal), last reviewed or updated October 30, 2026) says "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income."
- Supporting records: the IRS recordkeeping page (In the US (federal), last reviewed or updated May 1, 2026) says "You may choose any recordkeeping system suited to your business that clearly shows your income and expenses."
Practical tips
- Leave the CAT off your invoices. The department's CAT page (Ohio, checked October 31, 2026) says "the CAT cannot be separately billed or invoiced to another person to recuperate the taxes paid."
- Check county rates each quarter. The sales and use tax page (Ohio, checked October 31, 2026) says "The sales and use tax rate for Warren County (83) will increase from 6.75 % to 7.25 % effective October 1, 2026."
- Set sales tax up once. Billed's invoice software page says "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
- Group your costs. Billed's expense tracking page says "Give every expense a category so your spending is already sorted when you file taxes or hand the year to your accountant."
Frequently asked questions
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At a glance
| Topic | What the Ohio Department of Taxation or the IRS says |
|---|---|
| Sales tax, state | "which is 5.75 percent" (Ohio, checked October 31, 2026) |
| Combined cap | "cannot exceed 8.75 percent" (Ohio, checked October 31, 2026) |
| Commercial Activity Tax | "The CAT is taxed at .26% (.0026) of Ohio Taxable Gross Receipts." (Ohio, checked October 31, 2026) |
| Business income | "as of 2016, taxable business income is taxed at a flat rate of 3%." (Ohio, checked October 31, 2026) |
| Self-employment tax | "The self-employment tax rate is 15.3%." (IRS, In the US (federal), last reviewed or updated October 30, 2026) |
When this isn't for you
Meant for owners of small Ohio firms who want the department's own wording next to the federal points. City income taxes, payroll and audit questions aren't covered; take them to the Department of Taxation, your city or a tax professional.