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Tax Year 2026Updated July 13, 2026

Does Ohio Tax Overtime in 2026?

No - Ohio does not tax qualifying overtime premium pay under the OBBBA deduction in 2026. Ohio conforms to the Internal Revenue Code on a rolling basis (ORC 5747.01), capturing the overtime deduction (IRC §225, up to $12,500 single / $25,000 MFJ). Because Ohio starts from federal AGI and the overtime deduction is above-the-line, Ohio workers automatically receive the state tax benefit. At Ohio’s flat 2.75% rate (above the $26,050 zero bracket), a worker claiming the full $12,500 deduction saves $343.75 in Ohio state tax.

How Ohio's Overtime Tax Treatment Works

Ohio conforms to the OBBBA overtime deduction through its rolling IRC conformity mechanism. Per ORC 5747.01, Ohio automatically incorporates changes to the Internal Revenue Code as they take effect federally. The OBBBA overtime deduction (IRC §225) applied in Ohio as soon as it took effect at the federal level. The Ohio Department of Taxation has confirmed ongoing IRC conformity on its Conformity Updates page.

Ohio’s income tax starts from federal adjusted gross income (AGI), then applies Ohio-specific adjustments. The OBBBA overtime deduction is an above-the-line deduction reported on federal Schedule 1-A - it reduces federal AGI before Ohio’s computation begins. The deduction is already embedded in Ohio’s starting figure.

An important distinction for overtime: only the premium portion of overtime pay is deductible, not the total overtime wage. For a worker earning time-and-a-half, only the 0.5x premium above the regular rate qualifies. Ohio does not modify this federal rule - the same premium-only limitation applies for both federal and Ohio tax purposes.

Federal Overtime Deduction Quick Reference

DetailValue
IRC Section§225 (OBBBA)
Maximum deduction$12,500 overtime ($25,000 MFJ)
Deduction typeAbove-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 datesJan 1, 2025 – Dec 31, 2028
Ohio treatmentConforms
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)

Federal return:
Qualifying overtime premium: $8,000
Overtime deduction claimed: $8,000 (capped at $12,500)
Estimated federal tax savings: $960.00

Ohio return:
State tax savings from deduction: $220.00
Ohio’s 2.75% flat rate applies to income above the $26,050 zero bracket. This worker’s $50,000 total income is above that threshold, so the $8,000 overtime deduction reduces Ohio taxable income dollar-for-dollar, saving $220.00 in Ohio state tax.

Example 2: Nurse with $80,000 income and $12,500 in overtime premium (single filer, 22% federal bracket)

Federal return:
Qualifying overtime premium: $12,500
Overtime deduction claimed: $12,500 (capped at $12,500)
Estimated federal tax savings: $2,750.00

Ohio return:
State tax savings from deduction: $343.75
This nurse claims the full $12,500 single-filer cap. Under Ohio’s rolling IRC conformity (ORC 5747.01), the full deduction flows through to reduce Ohio taxable income, saving $343.75 at the 2.75% rate.

Ohio-Specific Rules for Overtime Workers

Flat 2.75% rate with zero bracket: Ohio’s income tax is effectively flat: 0% on the first $26,050, then 2.75% on everything above (HB 96, ORC 5747.02). The state tax savings from the overtime deduction is straightforward: deduction amount × 2.75%, provided total income exceeds the zero bracket. A worker claiming the full $12,500 deduction saves $343.75 in Ohio state tax.

Municipal income taxes: Many Ohio cities impose local income taxes from 1% to 3% (Columbus 2.5%, Cleveland 2.5%, Cincinnati 1.8%, Akron 2.5%). These taxes generally apply to gross earned income and are administered separately through RITA or CCA. The OBBBA overtime deduction likely does not reduce municipal tax liability. Overtime workers should verify with their city’s tax office.

School district income taxes: Some Ohio school districts levy their own income tax using either an Ohio AGI base or an earned income base. Districts on the Ohio AGI base may reflect the overtime deduction; earned income-based districts likely will not. Verify your district’s tax base with the Ohio Department of Taxation.

W-2 Code TT and IRC conformity: Ohio’s rolling IRC conformity means the state recognizes W-2 Box 12 Code TT for qualifying overtime premium pay starting in TY 2026. Employers follow the same federal reporting standards - no Ohio-specific overtime wage code exists.

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Frequently Asked Questions

Does Ohio conform to the OBBBA no-tax-on-overtime provision?
Yes. Ohio conforms to the Internal Revenue Code on a rolling basis per ORC 5747.01. The OBBBA overtime deduction (IRC §225) reduces federal AGI, and Ohio starts its income tax from federal AGI. The Ohio Department of Taxation has confirmed IRC conformity on its Conformity Updates page. No decoupling legislation has been enacted.
Do I still pay FICA on overtime in Ohio?
Yes. The OBBBA overtime deduction only applies to federal and state income taxes. Social Security tax (6.2%) and Medicare tax (1.45%) still apply to all overtime wages, including the premium portion. Ohio has no separate state payroll tax program.
What qualifies as deductible overtime in Ohio?
Only the overtime premium qualifies - not the full overtime wage. For time-and-a-half, only the 0.5x portion above your regular rate is deductible. You must be a non-exempt employee under the FLSA or equivalent state law. Salaried-exempt employees and self-employed individuals are not eligible. Ohio does not modify these federal qualification rules.
What is the overtime deduction cap for Ohio filers?
The federal cap is $12,500 for single and head-of-household filers, and $25,000 for married filing jointly. Ohio adopted IRC §225 via rolling conformity, so the same federal caps apply for Ohio purposes - no separate state cap.
Do Ohio municipal income taxes also exclude overtime premium?
Not necessarily. Ohio’s approximately 600 municipalities with local income taxes operate under separate authority and generally tax gross earned income, not federal AGI. The OBBBA overtime deduction likely does not reduce municipal income tax liability. Overtime workers in Ohio cities should check with RITA, CCA, or their specific city’s tax office.
How does Ohio’s zero bracket affect overtime workers?
Ohio taxes income at 0% up to $26,050 and at 2.75% above that threshold. If your total income (including overtime) is below $26,050, you already owe no Ohio income tax, so the overtime deduction provides no additional Ohio savings. The state tax benefit applies only to income above the zero bracket.
Can Married Filing Separately filers claim the overtime deduction in Ohio?
No. The federal OBBBA overtime deduction (IRC §225) excludes Married Filing Separately filers. Since Ohio’s conformity flows through the federal IRC, MFS filers cannot benefit at either the federal or Ohio level.