Ohio LLC taxes: what an Ohio LLC may owe, and to whom

What taxes does an Ohio LLC pay?

Forming an LLC with the Secretary of State does not register it for any tax. Each tax has its own agency, its own trigger, and its own account. Most small Ohio LLCs deal with three or four of the taxes below, not all of them.

This page is an overview. Each tax with its own rules has a full guide, linked in the sections below. None of it is tax advice; your accountant should confirm which taxes apply to your LLC.

The same LLC structure leads to very different tax lists depending on the work. A few typical examples show how much the list varies, even for businesses of similar size:

These are starting points, not answers. Whether a specific service is taxable, or a specific city taxes a rental LLC, is a question for your accountant with the facts in front of them.

How does the IRS tax an Ohio LLC?

The IRS gives every LLC a default classification. An LLC with one member is disregarded from its owner for income tax, so the profit goes on the owner's personal return. An LLC with two or more members is classified as a partnership: it files an information return, and each member reports their share. In both cases the LLC itself pays no federal income tax.

Owners who work in the business pay self-employment tax on their net earnings once those reach $400: 15.3%, split into 12.4% for Social Security and 2.9% for Medicare. The IRS lets you deduct the employer-equivalent portion of that tax when figuring adjusted gross income.

An LLC can change its classification. Form 8832 elects to be taxed as a corporation. Form 2553 elects S corporation status, which changes how working owners are paid and taxed; see Ohio LLC vs. S corp for that trade-off. For employment and excise taxes, the IRS treats even a single-member LLC as a separate entity, which is one reason most LLCs get their own EIN. Our EIN filing service handles that application if you'd rather not.

How does Ohio tax LLC pass-through income?

Ohio follows the federal pass-through result. ORC 5733.04(O) defines a pass-through entity to include LLCs and partnerships that are not taxed as corporations, and S corporations. The owners report their shares on the Ohio individual income tax return.

The business income deduction and the 3% rate

Ohio separates business income from other income. Under ORC 5747.01(A)(28), an individual can deduct up to $250,000 of business income ($125,000 for each spouse filing separately). ORC 5747.02(A)(4) taxes business income above that at a flat 3%. Each individual owner claims the deduction on their own return.

Rates on other income

Nonbusiness income goes through the regular brackets in ORC 5747.02(A)(3). For taxable years beginning in 2025, there is no tax on the first $26,050, then 2.75% up to $100,000 and 3.125% above. For taxable years beginning in 2026 and after, the statute applies 2.75% to income above $26,050.

Entity-level options and withholding

Two pass-through rules can put a filing on the LLC itself. ORC 5747.38 lets a pass-through entity elect to pay Ohio tax at the entity level. ORC 5747.41 imposes a withholding tax on certain individual investors' shares when those amounts exceed $1,000 for the year, unless the entity made the 5747.38 election. Out-of-state owners are where these come up most. They are worth a specific question to your CPA.

Does an Ohio LLC owe the Commercial Activity Tax?

Only if its Ohio taxable gross receipts exceed $6 million a year, the threshold for tax years 2025 and forward according to the Ohio Department of Taxation. The CAT is a tax on gross receipts, not profit, at 0.26%, and it applies the same way whether the business is an LLC, a corporation, or another form.

• The annual minimum tax ended starting in 2024.
• A business must register within 30 days of exceeding the threshold.
• Active CAT accounts file quarterly; the annual filing option was eliminated.
• An out-of-state business registers only if it has a bright-line presence in Ohio and exceeds the threshold.

Most new LLCs are far below the threshold and never register. If yours is growing toward it, the Ohio Commercial Activity Tax guide covers what counts as taxable gross receipts and how to register.

Does an Ohio LLC collect sales tax?

If it makes taxable sales or provides taxable services, yes. Ohio requires a vendor's license before the first taxable sale. The state rate is 5.75%, and county and transit rates are added on top depending on where the sale takes place.

• A vendor's license for a fixed location, or a transient vendor's license for shows and temporary locations, costs $50 for new applications since April 9, 2025.
• Each fixed location needs its own license.
• Returns are generally monthly, due by the 23rd for the prior month. Semiannual filing may be allowed when liability is under $1,200 per six-month period.
• Use tax applies to taxable purchases the LLC makes without paying sales tax, such as equipment bought from an out-of-state seller who didn't charge it.

Which goods and services are taxable is the hard part. The Ohio vendor's license guide goes through license types and the registration steps.

Do Ohio cities tax LLC profits?

Many do. Ohio municipalities levy income tax under ORC Chapter 718, and that tax reaches business net profits as well as wages. An LLC working in several cities can owe several of them, with apportionment deciding how much goes to each.

ORC 718.80 gives businesses an alternative: elect to have the Ohio tax commissioner serve as the sole administrator of their municipal net profit tax, instead of filing with each city. The initial election is due on or before the 15th day of the fourth month after the start of the taxable year, and the business lists the cities where it did business in the prior year.

City rules on pass-through entities, rates, and credits vary. Our guide to Ohio municipal income tax for businesses covers who files, where, and how the central filing election works.

What payroll taxes does an Ohio LLC with employees pay?

Once an LLC pays wages, it is an employer. ORC 5747.06(A) requires every employer maintaining an office or transacting business in Ohio to withhold Ohio income tax from employees' compensation each payroll period. Depending on where employees live and work, school district income tax and city income tax withholding can apply too.

• Federal: income tax withholding, Social Security and Medicare, and federal unemployment tax.
• Ohio: state income tax withholding through an account with the Department of Taxation.
• Local: school district and municipal withholding where they apply.
• Separate programs: Ohio unemployment insurance and workers' compensation, each with its own agency and registration.

An LLC with an S corp election is in this group even if the only employee is the owner. The step-by-step registration is in Ohio employer withholding registration.

Do Ohio LLC owners make estimated tax payments?

Usually, yes. A default LLC does not withhold income tax from its owners' share of profit, so the owners pay during the year through estimated payments instead of waiting for April.

• Federal: the IRS says you generally must make estimated payments if you expect to owe at least $1,000 for the year after withholding and refundable credits, and your withholding falls short of its safe-harbor amounts. Individuals use Form 1040-ES, and the year is split into four payment periods.
• Ohio: ORC 5747.09 requires estimated payments when your Ohio tax, less amounts withheld, is more than $500. For a calendar-year filer the cumulative targets are 22.5% by April 15, 45% by June 15, 67.5% by September 15, and 90% by January 15 of the next year.
• City: many Ohio cities with an income tax also expect estimated payments on net profits. Check the rules for each city where the LLC works.

A common habit is to move a fixed percentage of every deposit into a separate tax savings account. Your accountant can set the percentage from last year's return.

An Ohio LLC tax checklist for the first year

1. Get an EIN from the IRS after the Secretary of State files your articles.
2. Decide the federal classification with your accountant: default, S corp, or C corp. Mark the Form 2553 deadline if you plan to elect.
3. Before your first taxable sale, get a vendor's license.
4. Before your first payroll, open Ohio withholding and any school district or city withholding accounts that apply.
5. Check which cities you'll work in, and whether central filing of municipal net profit tax under ORC 718.80 makes sense.
6. Track Ohio gross receipts. If they approach $6 million, plan the CAT registration.
7. Set aside money for the owners' estimated federal and Ohio income tax, since the LLC usually doesn't withhold for them.
8. Keep the LLC's money in its own account so the returns are easy to prepare.

Taxes are one part of keeping the LLC current. The non-tax items, like keeping an agent on record, are in Ohio LLC ongoing requirements.

Where does an Ohio statutory agent fit with LLC taxes?

A statutory agent does not file or pay taxes. Its job is to accept service of process and official notices for the LLC at an Ohio address. Tax agencies usually write to the mailing address on the tax account. But a lawsuit, a garnishment order, or a notice tied to unpaid tax can be served on the agent, and those have deadlines that start running on delivery.

With our Ohio statutory agent service, anything delivered for your LLC is scanned to your portal the same business day. Service of process alerts every authorized contact and escalates to a phone call if nobody acknowledges it. We keep originals of state and tax correspondence for three years. Your accountant can be given an attorney or employee role limited to the documents they need. We don't give tax advice or track filing deadlines; that stays with your CPA.