Municipal Income Taxes
Tax Rates and Amounts collected, by Municipality, Calendar
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
State law requires that the rate must be uniform within a
municipality and cannot exceed one percent without a vote of
the people. Rates of taxation in 2007 ranged from a low of
0.40 percent in the City of Indian Hill Village 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.
Total municipal income tax revenue was $4.1 billion. Of this
amount, approximately $3.8 billion was collected by cities
and $0.3 billion by villages. There were sixty-one
municipalities (or 10.8 percent of the total) that did not
submit calendar year 2007 data. Thirty-six of these had
data submitted by their collection agency (RITA or CCA); for
the remaining twenty-five municipalities, prior year’s
collections are shown. Assuming these municipalities still
had the income tax in effect in calendar year 2007, a total
of 566 municipalities (236 cities and 330 villages) levied
Finally, there were nineteen municipalities that changed the
rate of taxation during calendar year 2007.
Data for Table LG-11 were obtained from surveys conducted
by the Ohio Department of Taxation.