Does Ohio Tax Overtime in 2026?
Yes - Ohio still taxes overtime pay in 2026. Ohio conforms to the Internal Revenue Code as of March 5, 2026 (S.B. 9), which includes OBBBA. But the federal overtime deduction (IRC §225) is taken after AGI, and Ohio's return starts from federal AGI, so the deduction does not reduce Ohio income. Income above Ohio's $26,050 zero bracket is taxed at 2.75%. The federal deduction still applies on your federal return.
How Ohio's Overtime Tax Treatment Works
Conformity: ORC 5701.11 defines the Internal Revenue Code for Ohio purposes as the Code as it existed on that section's effective date. S.B. 9 of the 136th General Assembly updated that date to March 5, 2026, bringing in federal changes made since March 7, 2025, including OBBBA.
Why conformity does not help: Ohio's IT 1040 starts on line 1 with federal adjusted gross income, which must match your federal AGI. The OBBBA overtime deduction is figured on Schedule 1-A after AGI and subtracted on Form 1040 line 13b. Ohio never uses that later figure, so the deduction never reaches the Ohio return.
The result: overtime pay is taxed in Ohio like any other wages. Income above the $26,050 zero bracket is taxed at 2.75%.
Federal Overtime Deduction Quick Reference
| Detail | Value |
|---|---|
| IRC Section | §225 (OBBBA) |
| Maximum deduction | $12,500 overtime ($25,000 MFJ) |
| Deduction type | Above-the-line (Schedule 1-A) |
| FICA still applies? | Yes (Social Security 6.2% + Medicare 1.45%) |
| MFS eligible? | No (MFJ or Single/HoH only) |
| Effective dates | Jan 1, 2025 – Dec 31, 2028 |
| Ohio treatment | Does not conform |
| What qualifies? | Overtime premium only (the 0.5x above regular rate), FLSA non-exempt employees |
Worked Examples Comparing Federal and Ohio Treatment
Example 1: Warehouse worker with $50,000 income and $8,000 in overtime premium (single filer, 12% federal bracket)
Qualifying overtime premium: $8,000
Overtime deduction claimed: $8,000 (capped at $12,500)
Estimated federal tax savings: $960.00
Ohio return:
The federal overtime deduction is taken after AGI, so this worker's Ohio income still includes the full $8,000 premium. With $50,000 of total income, above the $26,050 zero bracket, that premium carries about $220 of Ohio tax at 2.75%. No Ohio savings.
Example 2: Nurse with $80,000 income and $12,500 in overtime premium (single filer, 22% federal bracket)
Qualifying overtime premium: $12,500
Overtime deduction claimed: $12,500 (capped at $12,500)
Estimated federal tax savings: $2,750.00
Ohio return:
This nurse claims the full $12,500 single-filer cap federally. On the Ohio return the premium stays in income and carries about $344 of Ohio tax at 2.75%.
Ohio-Specific Rules and Considerations
Flat 2.75% rate with zero bracket: Ohio taxes income at 0% up to $26,050 and 2.75% above it. Overtime counts toward that total like other wages.
Municipal and school district income taxes: Ohio cities and many school districts levy their own income taxes. They tax earned income or Ohio income, and the federal overtime deduction reduces neither.
Related Tools
- No Tax on Overtime Calculator - calculate your federal overtime deduction
- Ohio Tax Guide - full state tax overview
- Ohio Paycheck Calculator
- Does Ohio Tax Tips?
- W-2 Code TP: Tips Reporting Guide
- W-2 Code TT: Overtime Reporting Guide
- All 51 States: Tips & Overtime Tax Map