Ohio is an outlier in its reliance on a gross receipts tax, the Commercial Activity Tax (CAT), as its primary business tax. Gross receipts taxes are generally more economically harmful than corporate income taxes because they apply to firms regardless of whether they earn a profit in a given year, and they cause harmful tax pyramiding, because this results in the same final good or service being taxed at multiple points along the production process.
Notably, however, Ohio’s CAT is imposed at a low 0.26 percent rate and was adopted as a replacement for a corporate income tax, a capital stock tax, and the tangible personal property tax, so despite its structural shortcomings, its adoption represented a meaningful tax cut for many businesses. In 2025, Ohio’s CAT exclusion was doubled to $6 million. Ohio ranks well on the property tax component, bolstered by its uniform assessment of different classes of property, its lack of tangible personal property taxes, and its lack of an estate or inheritance tax.
In recent years, Ohio has adopted significant individual income tax relief, lowering the top rate to 2.75 percent as of 2025. This has helped the state’s individual tax component score, but high-rate income taxes levied at the local level increase tax costs and compliance burdens for residents and nonresidents, especially since nonresident filing and withholding are required for many individuals who work even a single day in the state.
| Category | Rank | Rank Change | Score |
|---|---|---|---|
| Overall | 39 | 0 | 4.78 |
| Corporate Taxes | 45 | 0 | 3.96 |
| Individual Income Taxes | 33 | 2 | 4.91 |
| Sales Taxes | 44 | -1 | 3.97 |
| Property Taxes | 5 | 0 | 6.15 |
| Unemployment Insurance Taxes | 11 | 2 | 5.66 |
Get facts about taxes in your state and around the US
Ohio’s SB 9 will boost economic growth by conforming Ohio’s tax code to the domestic research and experimentation (R&E) immediate cost recovery provision in the One Big Beautiful Bill Act.
8 min read
The vaping industry has grown rapidly in recent decades, becoming a well-established product category and a viable alternative to cigarettes for those trying to quit smoking. US states levy a variety of tax structures on vaping products.
8 min read
Notably, the OBBBA makes permanent the individual tax changes first put in place by the TCJA, which avoids a tax hike on an estimated 62 percent of tax filers in 2026.
4 min read