Ohio implements updated withholding tables as flat tax phase-in continues

Ohio is moving toward a flat income tax system under reforms enacted in House Bill 96, the 136th General Assembly’s operating budget. The legislation reduced and consolidated the state’s progressive income tax brackets, setting Ohio on a path where, by 2025, most taxpayers will pay the same rate. Lawmakers designed these changes to simplify compliance for individuals, lower overall rates, and make the state more competitive for businesses. 

As part of this transition, the Ohio Department of Taxation has issued updated withholding tables effective for payrolls ending on or after Oct. 1, 2025. The revisions reflect income tax rate reductions authorized under House Bill 96. Employers must apply these tables to ensure accurate withholding for employees under the new system. 

At the same time, the state operating budget delivered several key priorities for the Ohio Society of CPAs (OSCPA). One provision clarifies ownership requirements for public accounting firms operating under an Employee Stock Ownership Plan (ESOP) structure within an alternative practice structure (APS). Another provision strengthens the pass-through entity (PTE) tax system by allowing an electing PTE tax credit to be claimed by a PTE that owns another PTE which has paid either the electing PTE tax (IT 4738) or the traditional composite return (IT 4708). These changes address longstanding technical hurdles for accounting firms and business taxpayers. 

For employers, the Department of Taxation has made available percentage-based and optional computer calculation methods, as well as updated daily, weekly, biweekly, semi-monthly, and monthly withholding tables. Employers are expected to use the revised tables to comply with Ohio’s updated income tax system. 

The updated withholding resources, along with detailed guidance, are available on the Employer Withholding Tax page of the Ohio Department of Taxation’s website.