Tax Data Series

MUNICIPAL INCOME TAX: Tax Rates and Collections, by Municipality, Calendar Year 2015

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 2015 ranged from a low of 0.50 percent to a high of 3.00 percent in the City of Parma Heights (Cuyahoga County).

The City of Euclid (Cuyahoga) is the only municipality levying and collecting municipal income taxes for its corresponding school district where the tax is levied on both residents and nonresidents of the municipality; the city’s income tax is 2.38% while the Euclid City School District has a 0.47% tax. Statutory authority for this type of municipal income tax was repealed beginning on January 1, 2001 by S.B. 287. An election to levy the tax (dividing revenue between a municipal corporation and a school district) is permitted in accordance with R.C. 718.09, but not on the income of individuals who do not reside in the municipality.

The LG-11 data is drawn from survey responses of Ohio’s municipalities. There were fifty-eight municipalities (or 9.4 percent of the total) that did not submit calendar year 2015 (CY15) data.  Using previously reported data for these municipalities and survey responses for the remainder, the total CY15 municipal income tax revenue was $4,990.2 million. This is an increase of $172.9 million or 3.6% from CY14.

Approximately $4,583.4 million was collected by cities and $406.8 million by villages.  For those localities that had the tax in effect for the full year, collections ranged from $7,378 in Village of Patterson (Hardin) to $781.7 million in the City of Columbus (Franklin).

Assuming the fifty-eight municipalities still had the income tax in effect in calendar year 2015, a total of 616 municipalities (240 cities and 376 villages) levied the tax.  There were three municipalities added to this report compared to the CY14 edition: Villages of Amanda (Fairfield), Rushsylvania (Logan) and Wayne (Wood). One village’s tax was repealed: Moscow (Clermont).

Data for Table LG-11 were obtained from surveys conducted by the Ohio Department of Taxation.