Ohio's New Flat Tax in 2026: What It Means for You

Transcript

Ohio moved to a flat state income tax rate in 2026, down from a graduated system that topped out at 3.125%. If you live in Ohio, here's what that means for you.

Ohio has been trimming its top income tax rate for close to two decades, and the flat tax is the next step in that same direction. It's driven partly by competition from neighboring states, like Indiana, which already runs a flat rate, and partly by a broader push in Columbus and statehouse politics, which we've seen across the country, to make the tax code simpler to file and cheaper to administer. So this is a continuation of a trend that's been running for years.

I think this bar chart does a good job of showing where the impact will be felt the most. Income between about $26,000 and $100,000 was already taxed at 2.75% in 2024, 2025, and 2026. So for someone whose taxable income tops out in that range, this probably doesn't mean much, because 2.75% is Ohio's new flat rate. If you were in that income range, you were already paying that rate.

The real dollar impact lands for those with incomes above $100,000 who live in Ohio, because we've seen almost a 1% reduction, down from 3.5% to 2.75%. Ohio has now officially moved from a graduated system, similar to the federal brackets, to a flat rate system.

I like to use this visual to show someone how their money might flow through the federal system and the state system, depending on the state they live in. Think of your income filling a series of buckets, or wine glasses if that's more your style. Staying with Ohio, the first $26,000 and change fills a bucket that isn't taxed at all, so we have a 0% rate on that bucket. Once that one's full, anything above it spills into the next bucket, taxed at whatever that bucket's rate is. Only the dollars that land in a given bucket get taxed at that bucket's rate.

All in all, a flat tax just means Ohio collapsed the buckets above $26,050 into one. So there's only one rate to track instead of two. And as I mentioned, you can use this tool for yourself on our website, and you don't have to live in Ohio. We have all 50 states, and you can see how your money flows through your state's system.

So if you make over $100,000 and you go to file your federal and state tax return next April, you will benefit in some fashion. You just might not notice it. And there you have it: a reduced tax rate for those making above $100,000 who live in Ohio.

If a financial adviser has never reviewed your tax return alongside your accountant, you may be missing out on some planning opportunities. As fellow Americans, we want to pay our fair share of taxes along the way, but we probably don't want to tip Uncle Sam above and beyond that. Taxes can be one of the greatest eaters of wealth. Full stop. Making sure we're not tipping Uncle Sam keeps more money in your pocket to potentially reinvest in the market, which could make a huge difference over time.

Food for thought. Have a great day. See you next time.

Common Questions

Who benefits from Ohio's 2026 flat tax?

The savings land on income above $100,000. Income between about $26,050 and $100,000 was already taxed at 2.75% in 2024 and 2025, so the flat rate does not change it. Above $100,000, the top rate came down to 2.75%, so higher earners keep a little more.

What is Ohio's income tax rate in 2026?

A flat 2.75%. Income at or below $26,050 is not taxed at the state level, and everything above that is taxed at 2.75%. This replaced Ohio's older graduated brackets.

Does the flat tax change the Columbus city income tax?

No. The City of Columbus still charges its own 2.5% municipal income tax on wages, separate from the 2.75% state rate. The flat tax only changed the state side.

Hosted byNick GeorgeCFP®, ChFC®, CLU®, IWA™FounderView bio →

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