Municipal Income Taxes
Tax Rates and Amounts collected, by Municipality, Calendar Year 2010
Municipal income taxes are generally imposed on wages, salaries, and other compensation earned by residents and nonresidents who work in the municipality. The income tax is also applied to business net profits that are attributable to activities in the municipality. Most municipalities allow a partial or full credit to residents for municipal income taxes paid to another municipality where they are employed.
Administration of the municipal income tax is strictly local, either by the cities and villages themselves or by central collection agencies under contract with various municipalities.
State law requires that the rate must be uniform within a municipality and cannot exceed one percent without approval by voters. Rates of taxation in 2010 ranged from a low of 0.40 percent in the city of Indian Hill Village (Hamilton County) to a high of 3.00 percent in the city of Parma Heights (Cuyahoga County).
The City of Euclid is the only municipality to levy and collect municipal income taxes for its corresponding school district. The city’s income tax is 2.38% while the Euclid City School District has a 0.47% tax. Although the Ohio legislature revoked this authority for all other communities beginning in 2001, it has since re-enacted this authority under the condition that only residents would be subject to the municipal income tax.
There were twenty-eight municipalities (or 4.8 percent of the total) that did not submit calendar year 2010 (CY10) data. Incorporating prior year's data, total CY10 municipal income tax revenue is estimated at $4,052.6 million. This is a increase of $115.5 million or 2.9% from CY09.
Approximately $3,749.3 million was collected by cities and $303.3 million by villages. Collections ranged from $1,945 in Village of Melrose (Paulding County) to $651.0 million in the City of Columbus (Franklin County).
Assuming the twenty-eight municipalities still had the income tax in effect in calendar year 2010, a total of 586 municipalities (238 cities and 348 villages) levied the tax. There were nine municipalities that had income taxes become effective during calendar year 2010.
Data for Table LG-11 were obtained from surveys conducted by the Ohio Department of Taxation.