What payroll deductions are employers required to withhold?

Payroll Tax Deductions Employers Must Withhold in Ohio

In Ohio, employers are responsible for withholding specific payroll taxes from employee wages to ensure compliance with federal and state requirements. Proper withholding supports accurate tax reporting and timely remittance.

Required Payroll Deductions

• Federal Income Tax: Employers must withhold federal income tax based on employee W-4 forms and IRS tax tables.
• Social Security Tax: Withhold 6.2% of wages up to the annual wage base limit, as required by the Federal Insurance Contributions Act (FICA).
• Medicare Tax: Withhold 1.45% of all wages for Medicare, with an additional 0.9% on wages above $200,000 for single filers (as of 2026).
• Ohio State Income Tax: Employers must withhold Ohio state income tax using the Ohio Department of Taxation withholding tables or formulas based on employee withholding certificates.
• Local Income Tax: Ohio has numerous municipal and school district income taxes. Employers must withhold local taxes where applicable, based on the employee’s work location or residence.

Operational Considerations

• Employee Classification: Ensure correct classification of workers as employees or independent contractors to determine withholding obligations.
• Accurate Recordkeeping: Maintain detailed payroll records including amounts withheld, employee withholding certificates, and tax filings.
• Timely Remittance: Submit withheld taxes to the appropriate federal, state, and local agencies by required deadlines to avoid penalties.
• Automation: Use payroll software or services that integrate federal, state, and local tax tables to automate withholding calculations and filings.
• Reporting Requirements: File quarterly payroll tax returns such as IRS Form 941 and Ohio IT 941, along with local tax reports as applicable.