Free Ohio Payroll Tax Calculator and Ohio Tax Rates

Seven U.S. Presidents, from Grant to McKinley, were born in Ohio. So even though you might not have any political ambitions, you’re walking down the very same streets some of our nation’s greatest leaders walked on. Whether your company builds mailboxes that can withstand the toughest of Cleveland winters or grills up the best late night chili dogs in Cincinnati, you’re living in a state seething with opportunity. The last thing you want to do is blow that opportunity by messing up your payroll, consequently losing the trust and dedication of your employees.

Luckily, our payroll calculator is here to help you avoid any payroll tax fiascos. The process is simple. All you have to do is enter each employee’s wage and W-4 information, and our calculator will process their gross pay, deductions, and net pay for both Ohio and Federal taxes.

Federal Payroll Taxes

First and foremost, let’s walk through a summary of federal payroll taxes that all employees have to pay, no matter which state they live in. If you would like to see each step in detail, check out the step-by-step guide that we created just for you.

1. Calculate Gross Pay.

   a. For hourly employees, simply multiply their hourly rate by the number of hours worked during the pay period. Remember to increase the rate for any overtime hours worked.

   b.For salaried employees, take their annual salary and divide it by the number of pay periods.

   c.Bonuses, commissions, or tips also get added to gross pay.

2. Subtract Pre-Tax Deductions. If your employees have any pre-tax deductions like 401(k), for example, subtract them from gross pay so that their taxable income is reduced by this amount.
3. Calculate the Federal Income Tax. Now that you have adjusted gross pay, you can calculate the amount of federal income tax that your employees owe the IRS. The tax rate ranges from 0% all the way up to 37%. You can find all the minute details in the IRS Publication 15-T.
4. Deduct FICA Taxes. FICA stands for Federal Insurance Contributions Act, and it collects two taxes that both employees and employers have to pay: Social Security and Medicare.

   a.Social Security Tax: Withhold 6.2% of each employee’s taxable wages up to $137,700 for the year. If an employee makes more than $137,700, any salary above this amount is exempt. As an employer, you also have to pay the IRS 6.2% of your employee’s salary dollar-for-dollar.

   b.Medicare Tax: Withhold 1.45% of each employee’s taxable wages up to $200,000 for the year. If an employee makes more than $200,000, an Additional Medicare Tax (super original name, right?) of 0.9% should be withheld. As an employer, you’re only responsible for matching 1.45% of the first $200,000.

5. Calculate the FUTA Tax. FUTA stands for the Federal Unemployment Tax Act. Employers are responsible for paying 6% of each employee’s first $7,000 of taxable income. Employees are not responsible for paying FUTA. If you pay state unemployment tax in full and on time, you are eligible to receive a 5.4% tax credit, bringing your effective FUTA tax rate down to 0.6%.
6. Subtract Post-Tax Deductions. If your employees have post-tax deductions, which can be anything from garnishments like child support to life insurance, you will need to make a deduction here and send the deduction to the appropriate jurisdiction.

Ohio State Payroll Taxes

Ohio payroll taxes can be a little hard to keep track of. Income tax rates range from 0% to 4.997% with eight varying tax brackets. Here’s a breakout of the various tax brackets, courtesy of the Ohio Department of Taxation.

To make matters just slightly (maybe a little more than slightly) more complex, 566 Ohio cities and villages charge an added local income tax. Ohio local income taxes, which are referred to unofficially as the RITA Tax, ranging from 0.5% to 2.75%.

Ohio State Unemployment Insurance (SUI)

As an employer, you’re responsible for paying SUI (remember, if you pay your state SUI in full and on time, you get a 90% tax credit on FUTA).

SUI tax rates range from 0.3% to 9.4%. New employers pay 2.7% in 2020, and 5.8% if you’re in the construction industry. The taxable wage base is $9,000 for each employee.

Now Prep Your Signature!

Calculate each employee’s net pay, cut those checks (or transfer those direct deposits, whatever suits your employees’ fancy), and make sure you have enough left in your own account to cover FICA and UI taxes.

Plus, be sure to submit your federal tax filings by filling out Forms 940 (yearly) and 941 (quarterly). Deposits can also be made on an ongoing basis through the EFTPS payment system. Learn more about the IRS deadlines here.

A Couple More Ohio State Tax Resources

Our handy calculator can take you far, but you can never learn enough about all the intricacies of payroll taxes, so here are a couple more resources that can help you understand Ohio payroll a little better:

Ohio Department of Taxation: (800) 282-1780 | Employer Withholding Taxes | Business Registration | Reporting Requirements

Ohio Department of Job and Family Services: (614) 466-2455 | Office of Unemployment Insurance Operations

RITA Ohio: (800) 860-7482 | File Your Taxes