Pity the woman who lives in NE Ohio named Rita, as the name tends to make locals clutch their wallets! RITA (Regional Income Tax Agency), is an income tax (in addition to the state and county tax) that is based on the city in which you reside AND the city in which you work (which are two different cities for most people). This is just one of the many nuances of NE Ohio taxes that could surprise newcomers (more on RITA below). Every state has a unique tax structure and depending on what city you are moving from, Ohio’s taxes may be more or less than what you are used to paying. But many times you don’t even know to ask about taxes you never paid before. RITA is one of those taxes! Luckily Ohio is not on the list of the 10 worst states for taxes….compare your state here.
And, although nothing can replace the professional advice you will need from your personal accountant, here are the individual (not corporate) taxes in the state of Ohio to be aware of when you are relocating to the Cleveland or Akron area.
- Income Taxes – Ohio has a state income tax (unlike the 7 states that have no state income tax). In addition, Ohio is the only state in the US that allows each individual municipality to set its own tax rates, establish its own rules about income & deductions and issue its own tax forms (more on that story here). We think it’s important that you know about this so you can negotiate the correct salary and make sure you are comparing apples to apples when determining cost of living in Ohio. Each suburb in NE Ohio has its own income tax rate, as well as income tax credits for individuals who work in one suburb and live in another (almost everyone!) and each community relies on one of two different agencies to collect & remit income taxes on their behalf. For current info on these tax collection agencies and their rates of taxation: RITA (Regional Income Tax Agency and CCA (Central Collection Agency). This is why there are yells from new Ohio residents like “who the heck is RITA and why do we owe her $1,632?).
- Sales Taxes – each county in Ohio has it’s own sales tax rates (unlike the 5 states that don’t charge customers any sales tax: Alaska, Delaware, Montana, Oregon and New Hampshire). Sales taxes apply to all consumer purchases including major household appliances, automobiles, clothes, toiletries, etc. Here is a (small) list of things exempted from Ohio sales tax. Sales taxes currently range from 6.5% to 8% (Cuyahoga County has the highest sales tax at 8%. Check out this sales tax by county map and this Plain Dealer story that helps explains Ohio taxes. Many people will travel to a nearby county with lower sales taxes to lower their overall bill for things like appliances, computers, clothes, etc. but this doesn’t work for vehicle purchases…they charge sale tax based on the county you live in, not the county where you purchased your vehicle. (rats, they figured that one out).
- Property Taxes- each suburb in NE Ohio has its own real estate tax rate. These taxes typically include taxes collected for the county (our regionalized form of government), the city/suburb you live in, your suburbs’s public schools, the library, the port authority, the public park system and many times a technical school or community college as well. The Plain Dealer’s Data Central has a great summary/chart
of cost of real estate taxes per $100K value for suburbs in 7 different counties surrounding Cleveland and Akron. This could be very helpful to know as you are house hunting in NE Ohio, so you know what amount taxes will add to your cost of living. (Auditors conduct appraisals of every real estate property every six years to update values.)
- Individual Estate Taxes – in January, 2013 Ohio repealed taxes for all estates with net taxable value below $338,333. Above that the tax is 6-7% of the estate.
Executive Arrangements has relied on its own corporate accountant for many years to help answer questions from those relocating to NE Ohio through EA’s services. He has generously offered to take individual calls for general questions about how a relocation would impact your family’s budget (and we whole heartedly endorse him if you need a new accountant in NE Ohio!) John Bonfiglio, Partner, BSB Partners
To learn more about how Executive Arrangements can provide your recruits and recent transplants to NE Ohio with cost of living and quality of life information, call us at 216.231.9311.