Ohio has no traditional corporate income tax — instead it levies a Commercial Activity Tax (CAT) of 0.26% on gross receipts over $3M. Does not conform to federal bonus depreciation.
Key Planning Insight:
Ohio enacted major tax reform in 2026 — moving to a flat 2.75% income tax rate for all nonbusiness income. The Commercial Activity Tax (CAT) replaces corporate income tax. PTET election is available. Municipal income taxes also apply in many Ohio cities.
Ohio-Specific Tax Strategies
These strategies are especially powerful or unique in Ohio. Click any strategy to learn more.
Ohio's PTET election allows pass-through entities to pay state income tax at the entity level. Combined with Ohio's small business deduction, this creates a powerful tax reduction strategy for business owners.
Ohio's Commercial Activity Tax (CAT) is a gross receipts tax of 0.26% on business revenue over $1 million. Unlike income taxes, the CAT applies to gross revenue — not profit. Planning strategies include entity structuring, revenue sourcing, and coordinating with Ohio's small business deduction.
Ohio allows a 100% deduction on the first $250,000 of business income for pass-through entity owners. Income above $250,000 is taxed at a flat 3%. This makes Ohio very favorable for small business owners — effectively creating a $250,000 tax-free threshold.
Section 179 allows businesses to deduct the full purchase price of qualifying equipment, vehicles, and software in the year of purchase rather than depreciating over time. The 2026 federal limit is over $1 million. Some states cap or limit Section 179 conformity — check your state rules.
S-Corp owners must pay themselves a "reasonable salary" subject to payroll taxes (15.3%), but remaining profits distributed as shareholder distributions avoid self-employment tax entirely. Optimizing the salary-to-distribution ratio is one of the most impactful tax strategies for business owners earning $60,000+ in net profit.
Choosing the right business structure is the single biggest tax decision you'll make. Here's what Ohio LLC and S-Corp owners need to know.
Ohio LLC Formation
Ohio LLCs are taxed as pass-through entities by default. All profits flow to your personal return and are taxed at 2.75% (flat, major reform in 2026). Electing S-Corp status can significantly reduce your self-employment tax burden.
LLC vs. S-Corp in Ohio
Ohio offers a Pass-Through Entity Tax (PTET) election — a major advantage for LLC and S-Corp owners. By paying state income tax at the entity level, you bypass the $10,000 federal SALT deduction cap and deduct the full state tax bill on your federal return.
Top LLC Write-Offs in Ohio
Ohio LLC owners can deduct: business expenses (IRC §162), home office (IRC §280A), vehicle mileage (IRC §179), Section 179 equipment expensing, retirement contributions (Solo 401k or SEP-IRA), health insurance premiums, and business meals. Note: Ohio does not conform to federal bonus depreciation — an add-back on your state return may be required.
Ohio Business Tax Note
Ohio has no traditional corporate income tax — instead it levies a Commercial Activity Tax (CAT) of 0.26% on gross receipts over $3M. Does not conform to federal bonus depreciation.
These federal strategies apply to Ohio residents and business owners. Click any strategy to see full details, savings estimates, and eligibility requirements.
Common questions about Ohio LLC taxes, S-Corp elections, and business write-offs — answered by Uncle Kam's tax advisors.
Ohio's top marginal income tax rate is 2.75% (flat, major reform in 2026). Business owners and self-employed individuals pay this rate on their net business income. Strategies like the S-Corp election, pass-through entity tax (PTET) election, and maximizing deductions can significantly reduce your effective Ohio tax rate.
The most powerful write-offs for Ohio LLC owners include: the S-Corp election to reduce self-employment taxes, Section 179 and bonus depreciation for equipment and real estate, the home office deduction, vehicle and mileage deductions, Solo 401(k) or SEP-IRA contributions, and business meals and travel. Ohio-specific strategies like the PTET election and state-specific credits can add further savings.
Yes. Ohio offers a pass-through entity tax election that allows S-Corps and partnerships to pay state income tax at the entity level. This is a powerful SALT workaround that lets business owners deduct state taxes on their federal return, bypassing the $10,000 SALT cap. Uncle Kam's tax advisors can help you determine if the Ohio PTET election is right for your business.
Ohio does not fully conform to federal bonus depreciation rules. You may need to add back bonus depreciation on your Ohio state return and depreciate assets over a longer schedule. However, Section 179 expensing may still be available up to Ohio's state cap. A tax advisor can help you navigate this.
For most Ohio business owners earning over $60,000 in net profit, electing S-Corp status can save $5,000–$20,000 per year in self-employment taxes. The right choice depends on your income level, Ohio's franchise or minimum tax requirements, and your business structure. Uncle Kam's advisors specialize in Ohio entity structuring — book a free call to get a personalized recommendation.
Self-employed individuals in Ohio can reduce state taxes by: maximizing business deductions (home office, vehicle, equipment), contributing to a Solo 401(k) or SEP-IRA, electing S-Corp status to reduce self-employment tax, using the PTET election if available, and timing income and deductions strategically. A Ohio-based tax strategy session with Uncle Kam can identify your biggest opportunities.
Real estate investors in Ohio benefit most from cost segregation studies (accelerating depreciation on commercial and rental properties), the 1031 exchange (deferring capital gains on property sales), bonus depreciation (if Ohio conforms), the short-term rental loophole, and real estate professional status (REPS). Ohio's specific tax rules can significantly impact your real estate ROI — get a free strategy review from Uncle Kam.
