Does Ohio Tax Social Security and Retirement Income?

Social Security is fully deductible

Ohio starts from federal adjusted gross income, so the taxable part of a Social Security benefit arrives on the Ohio return and is then removed. The Schedule of Adjustments deducts the full amount of Social Security included in federal AGI, with no income limit, and a companion line deducts Railroad Retirement benefits that federal law exempts from state tax. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

The deduction has a side effect worth knowing. Income deducted on the Schedule of Adjustments is not part of Ohio adjusted gross income, so Social Security does not count toward the income tests for the personal exemption or the senior credits, and it does not count as income for the homestead exemption either. It also cannot be used to qualify for the joint filing credit. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions are taxed, apart from military retired pay

A private-employer pension is taxed in full as ordinary income. So are pensions from Ohio’s public retirement systems and federal civil service annuities: Ohio has no exclusion for government pensions. The only relief aimed at pension income is the retirement income credit, which is worth at most $200 per return. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Military retirement income is deductible in full when it is included in federal AGI and relates to service in the uniformed services, the reserves or the National Guard. “Uniformed services” includes the commissioned corps of NOAA and the Public Health Service. A federal civil service retiree who also served in the military can deduct the share of the civil service pension that is attributable to the years of military service. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

IRA and 401(k) withdrawals are taxed as ordinary income

Whatever part of an IRA or 401(k) distribution is in federal AGI is in Ohio income too. There is no age-based exclusion and no dollar cap to track. Because contributions were deductible for Ohio when they were deductible federally, the federal taxable amount on Form 1099-R is normally the Ohio taxable amount. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

A Roth conversion is taxed the same way: the converted amount is included in federal AGI and flows through to Ohio at 2.75%. Ohio has no exclusion that shelters it. A conversion also raises Ohio adjusted gross income for the year, which is the figure behind the $100,000 cap on the retirement income and senior credits and the income test for the homestead exemption. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Distributions taken on account of retirement, including traditional IRA and 401(k) withdrawals, count toward the retirement income credit. With $8,001 or more of such income the credit is the maximum $200; smaller amounts earn $25 to $130. The credit is per return, not per spouse. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed at the same 2.75%

Ohio makes no distinction between ordinary income and long-term capital gains or qualified dividends. Everything in federal AGI that is not deducted on the Schedule of Adjustments is taxed through the same schedule. Interest on U.S. government obligations is deducted, and interest on other states’ municipal bonds, which is excluded federally, is added back. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Federal capital loss rules carry over because the starting point is federal AGI: the $3,000 net loss allowance and loss carryforwards reduce Ohio income exactly as they reduce federal income. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

For tax years beginning in 2026 the statute sets one rate. If Ohio adjusted gross income less exemptions is $26,050 or less, no tax is due. Above that, the tax is $332 plus 2.75% of the amount over $26,050. The same schedule applies to every filing status. In 2025 income over $100,000 was taxed at 3.125%, and in 2024 at 3.5%. (Ohio Revised Code 5747.02, income tax rates)

The $332 is a fixed charge that applies as soon as income passes $26,050, so the schedule is not simply “0% then 2.75%”. A filer with $26,050 of taxable income owes nothing; a filer with $26,051 owes $332 before credits. The bracket table on this page shows the two rates, and the example calculations add the $332. (Ohio Revised Code 5747.02, income tax rates)

Ohio has no standard deduction. Instead each filer, spouse and dependent gets a personal exemption that depends on modified adjusted gross income: $2,400 at $40,000 or less, $2,150 from $40,001 to $80,000, and $1,900 above that. The exemption shown in the summary here is for income between $40,001 and $80,000 (single) and above $80,000 (joint). These are the amounts in the 2025 instructions, and they carry over to 2026 because House Bill 96 suspended the annual inflation adjustment of the exemptions and the income brackets for 2025 and 2026. (Ohio Legislative Service Commission, Greenbook analysis of the enacted budget (H.B. 96), Department of Taxation)

High earners lose the exemption altogether. For 2025 it was zero at modified adjusted gross income of $750,000 or more, and for 2026 and later years the statute lowers that point to $500,000. There is no additional exemption for age 65; age is recognized through the $50 senior citizen credit. (Ohio Revised Code 5747.025, personal exemptions)

Retirement income credit: $25 to $200 per return, based on pension, IRA and 401(k) income received on account of retirement and included in Ohio adjusted gross income. The full $200 applies at $8,001 or more. Available only when modified adjusted gross income less exemptions is under $100,000. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Senior citizen credit: $50 per return (not per person) for a filer who was 65 or older at year end, with the same $100,000 income cap. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Lump sum credits: a retiree who takes a total distribution can instead claim a one-time lump sum retirement credit, or from age 65 a lump sum distribution credit. Each permanently replaces the annual credit it relates to, so claiming one ends the $200 or $50 credit for all future years. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Joint filing credit: 5% to 20% of the tax, up to $650, when each spouse has at least $500 of qualifying income and, for 2026, modified adjusted gross income is under $500,000. Qualifying income is anything in Ohio adjusted gross income other than interest, dividends and distributions, capital gains, rents and royalties, so pension and IRA income qualifies. Social Security does not, because it is deducted before Ohio adjusted gross income is reached. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Medical deduction: long-term care insurance premiums are deductible in full, as are health insurance premiums paid while not eligible for Medicare or an employer plan. Premiums paid while on Medicare and other out-of-pocket medical costs are deductible to the extent they exceed 7.5% of federal AGI. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Ohio's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which does not change with the state. The tax bracket calculator and the guide to taxes in retirement cover that side.

Ohio’s income tax is low, and property tax makes up some of the difference. The Tax Foundation’s 2026 comparison, using 2024 Census data, puts the effective rate on owner-occupied homes at 1.36% of value, the 8th highest in the country. On a $350,000 home that is about $4,800 a year, with large differences between school districts. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figure))

The homestead exemption is the main senior program, and it is means-tested. For tax year 2026 a homeowner who is 65 or older, or permanently and totally disabled, with modified adjusted gross income of $41,000 or less is taxed as if the home were worth $29,700 less. The saving depends on the local tax rate. Homeowners who already received the exemption in 2013, before the income test was introduced, keep it regardless of income. (Ohio Department of Taxation, real property tax homestead means testing FAQ)

Because the income measure is Ohio modified adjusted gross income, Social Security is largely outside it. A retired couple living on $60,000 of Social Security and $35,000 of IRA withdrawals can qualify, while a couple with the same total income drawn mostly from IRAs cannot. (Ohio Department of Taxation, real property tax homestead means testing FAQ)

The state sales tax is 5.75%. Counties and regional transit authorities add their own rates, and the Tax Foundation puts the average combined rate at 7.29% as of January 2026. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figure))

Food bought for consumption off the premises where it is sold, which covers ordinary groceries, is exempt, as are prescription drugs. Clothing is taxed at the full rate, as are restaurant meals. (Ohio Revised Code 5739.02, sales tax levy and exemptions)

Ohio repealed its estate tax for deaths on or after January 1, 2013, and it has no inheritance tax. Nothing is owed to the state on an estate of any size, whoever inherits it. (Ohio Department of Taxation, estate tax)

For households above the federal exclusion, that leaves the federal estate tax as the only transfer tax to plan around. Inherited traditional IRAs remain subject to Ohio income tax when the beneficiary, if an Ohio resident, takes distributions. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

House Bill 96, the 2025 budget act, finished the move to a flat tax. The top rate fell from 3.5% in 2024 to 3.125% in 2025, and from 2026 all nonbusiness income above $26,050 is taxed at 2.75%. The fixed amount charged at that threshold also fell, from $342 in 2025 to $332. (Ohio Revised Code 5747.02, income tax rates)

The same act began denying personal exemptions and the joint filing credit to high earners. The cutoff is modified adjusted gross income of $750,000 for 2025 and $500,000 for 2026 and later years. It also suspended the annual inflation adjustment of the brackets and exemption amounts for 2025 and 2026. (Ohio Legislative Service Commission, Greenbook analysis of the enacted budget (H.B. 96), Department of Taxation)

The Department of Taxation’s 2026 estimated tax worksheet, as posted on the review date, prints the 2025 table, with $342 and a 3.125% rate over $100,000. This page uses the 2026 schedule in the statute, which is also the schedule described in the Legislative Service Commission’s analysis of the enacted budget. (Ohio Department of Taxation, 2026 Ohio estimated income tax worksheet and instructions (IT 1040ES))

House Bill 479 of 2026 authorizes a one-time property tax reduction for owner-occupied homes that receive the homestead exemption. It applies to tax year 2026, or tax year 2027 for manufactured homes, and comes off the first-half bill issued in December 2026 or January 2027. The reduction is the same fixed amount for every eligible home, set after county auditors report how many homes qualify, so an owner sees the figure on the bill rather than applying for it. (Ohio Legislative Service Commission, Final Analysis of H.B. 479 (136th General Assembly))

A package of property tax bills signed on December 19, 2025 (House Bills 124, 129, 186, 309 and 335) limits how fast bills can rise after reappraisals. House Bill 186 creates a credit that keeps certain school district tax increases to the rate of inflation, with relief starting in 2026. (Ohio House of Representatives, property tax relief legislation signed December 19, 2025)

Ohio treats “resident” and “domiciled” as the same thing, and anyone with a home in Ohio, owned or rented, is presumed to be a resident however long they are away. The instructions give the example of someone who winters in Florida but keeps an Ohio driver’s license and voter registration: a full-year Ohio resident. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Leaving is tested by “contact periods”. A person with a home outside Ohio has one whenever they are away from it overnight and spend any part of two consecutive days in Ohio. With fewer than 213 in the year, a person needs to show it is more likely than not that they were a nonresident; with 213 or more, the evidence must be clear and convincing. A filer who meets set criteria can lock in nonresident status by checking the Ohio Nonresident Statement box on Form IT 10 or IT 1040, which replaced the separate IT NRS form from 2025. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)

Part-year residents are taxed on all income while resident and on Ohio-source income otherwise. Once someone is no longer a resident, federal law stops Ohio from taxing their pension, IRA or 401(k) income, including a pension from an Ohio public retirement system. (4 U.S.C. 114, limitation on state income taxation of certain pension income)

Local taxes need a separate look. Ohio’s municipal income taxes are barred by statute from reaching pensions, Social Security, retirement plan payments and intangible income such as interest, dividends and capital gains, so a retiree with no wages generally owes a city nothing. (Ohio Revised Code 718.01, municipal income tax definitions and exempt income)

School district income taxes are different: districts that use the “traditional” base tax modified adjusted gross income less exemptions, which includes pensions, IRA withdrawals and investment income. Districts on the “earned income” base tax only wages and self-employment income. (Ohio Department of Taxation, 2025 IT 1040 / SD 100 instruction booklet)