Ohio Local Taxes

In Ohio, employees are often subject to multiple local income taxes based on where they live and work. The application provides comprehensive support for managing these complex requirements, allowing employees to have multiple active local tax records.

Types of Local Taxes in Ohio

The system distinguishes between the following local tax types based on the value selected in the Local Tax Type field on the General tab of the Local Tax Codes page:

Typical Employee Configuration

An Ohio employee will typically have:

• One active school district tax, based on residence.

• One or two active residential taxes, based on the municipality of residence.

• One or more worksite taxes, based on actual work locations.

Ohio Local Tax Requirements

Municipal Income Tax Overview

Ohio has a complex local income tax system with over 600 municipalities imposing income taxes. The regulatory bodies include:

• RITA (Regional Income Tax Agency): Administers municipal income tax for over 400 Ohio municipalities.

• CCA (Central Collection Agency): Administers municipal income tax for several major Ohio cities, including Cleveland.

Electronic filing requirements

According to Ohio Revised Code Section 5747.07, 5747.071, and Ohio Administrative Rule 5703-7-19:

Filing deadlines

Comprehensive reporting rule

According to the Ohio Revised Code Section 718.03(H) (effective since tax year 2016):

If an employer reports local W-2 information for any employee, the employer must file all of that employee's local W2 information, regardless of whether the same agency administers the municipal income tax.

Penalties for non-compliance

Record retention

Employers are required to maintain tax records, including W-2 information, for at least four (4) years from the due date.

Manage Local Taxes

To manage local taxes, you must:

• Add new local tax codes when an employee moves or changes work locations.

• Inactivate local tax codes when they no longer apply:

  • School and residential taxes: When an employee moves to a new residence.

  • Worksite taxes: When an employee changes work locations.

Timecard Import and Local Tax processing

Import Timecard validation

When loading timecards using the Import Batch Timecards page, the system validates that the tax code exists:

• If the local tax code is present in the timecard record, the system validates it against the Local Tax Codes page.

• The system checks for worksite tax records. If the worksite tax code cannot be found, an error is logged. If multiple worksite tax records exist for a crosswalk value, an error is logged.

Automatic Worksite Tax record creation

During payroll calculation (worksheet processing), the system automatically creates local tax records for worksite taxes if:

1. The timecard references a valid worksite tax code on the Local Tax Codes page.

2. The employee does not already have an active record for that worksite location.

3. The tax type is W-Worksite.

This ensures employees are correctly set up for all work locations referenced in their timecards.

W2 Reporting - Boxes 18-20

When completing W2 forms for Ohio employees:

• Box 18 (Local wages): Reports wages subject to local taxation.

• Box 19 (Local income tax): Reports the amount of local tax withheld.

• Box 20 (Locality name): Must accurately reflect each locality where tax was withheld.

If taxes were withheld for multiple localities, each should be reported separately on the W2.

Standard reports

Standard reports have been modified to reflect multiple local taxes, including:

• Payroll registers showing local tax breakdowns by type.

• Year-end W2 processing reports.

• Local tax reconciliation reports.

Related resources

• RITA (Regional Income Tax Agency)

• CCA (Central Collection Agency)

• Ohio Department of Taxation - Employer Withholding