Which States Really Have the Highest (and Lowest) Income Taxes—and Where Does Ohio Fit?
When people think about taxes, the conversation usually centers on rates—what percentage you pay. But that only tells part of the story.
A more meaningful way to compare states is to look at income tax revenue as a share of personal income. This approach captures not just tax rates, but also income levels, deductions, and how aggressively states actually collect taxes.
And when you look at it this way, the differences across states—and where Ohio lands—become much more interesting.
A Better Way to Measure Tax Burden
State income taxes fund everything from education and healthcare to infrastructure. But headline tax rates don’t always reflect what residents actually pay.
That’s why economists often focus on income tax revenue as a percentage of per capita personal income—a more practical measure of real tax burden.
State Income Tax Burden by the Numbers
Below is the key chart illustrating how much each state collects relative to residents’ income:
Source: USAFacts
Where Ohio Falls
Ohio sits somewhere in the middle of the pack—neither a high-tax outlier nor a no-tax haven.
Here’s what makes Ohio unique:
Ohio’s rates are relatively modest compared to high-tax states like Oregon or California. Over the past decade, Ohio has also reduced income tax rates, shifting some reliance to other revenue sources.
Balanced Revenue Approach
Unlike states with no income tax (like Texas or Florida), Ohio still relies on income taxes—but it balances that with:
- State and local sales taxes
- Property taxes, which can vary significantly by county (notably higher in some suburban areas around Cleveland)
Local Income Taxes Matter—A Lot
This is where Ohio stands out.
Many cities—including Cleveland and its surrounding suburbs—impose local income taxes, often ranging from 1% to 3%.
That means:
- Even if the state-level burden looks moderate, your total effective income tax rate can be meaningfully higher
- Where you live (or work) within Ohio can materially impact your tax picture
Comparing Ohio to Other States
- High-Tax States
States like Oregon or California collect a higher share of income, driven by:
- Higher marginal rates
- More progressive tax structures
Ohio, by comparison, tends to feel more moderate and predictable, especially for middle-income households.
- No-Income-Tax States
States like Texas and Florida collect no income tax—but:
- They rely heavily on sales and property taxes
- Total tax burden may not be dramatically lower depending on lifestyle and spending
Ohio often lands in a “middle ground”:
- Some income tax
- Moderate sales tax
- Variable property taxes
- Added layer of local income taxes
What This Means for Ohio Residents
For individuals and families in Northeast Ohio, the real takeaway is this:
- Your “True” Tax Rate Is Layered
You’re not just paying:
- Federal tax
- Ohio state tax
You may also be paying:
- Local city income tax
- Property tax (if you own a home)
- Sales tax on spending
- Location Decisions Matter
Moving even a few miles—from one suburb to another—can:
- Change your local tax rate
- Impact property taxes significantly
- Retirement Planning Opportunities
Ohio can actually be tax-friendly for retirees, depending on income sources:
- Social Security is not taxed at the state level
- Certain retirement income may receive favorable treatment
- But local taxes can still apply depending on municipality
Planning Around Ohio Taxes
For clients, this creates planning opportunities:
- Municipal tax planning: Understanding credit systems (some cities offer credits for taxes paid where you work, others don’t)
- Retirement income strategies: Structuring withdrawals to minimize state taxation
- Location optimization: Evaluating where to live within Ohio—not just which state
Final Thoughts
The takeaway is simple: Ohio isn’t a high-tax state—but it’s also not as simple as it looks.
At the state level, tax burden is moderate. But once you layer in local taxes and property taxes, the picture becomes more nuanced.
That’s why looking beyond tax rates—and focusing on total, real-world tax impact—is critical when making financial decisions.