Does Ohio Tax Tips in 2026?
Yes - Ohio still taxes tips in 2026. Ohio conforms to the Internal Revenue Code as of March 5, 2026 (S.B. 9), which includes OBBBA. But the federal tips deduction (IRC §224) is taken after AGI, and Ohio's return starts from federal AGI, so the deduction does not reduce Ohio income. Tips above Ohio's $26,050 zero bracket are taxed at 2.75%. The federal deduction still applies on your federal return.
How Ohio's Tips 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, and the instructions say it must match your federal AGI. The OBBBA tips deduction is not part of AGI. It is figured on Schedule 1-A after AGI and subtracted on Form 1040 line 13b to reach federal taxable income. Ohio never uses that later figure, so the deduction never reaches the Ohio return.
The result: tips are taxed in Ohio like any other wages. Income above the $26,050 zero bracket is taxed at 2.75%.
Federal Tips Deduction Quick Reference
| Detail | Value |
|---|---|
| IRC Section | §224 (OBBBA) |
| Maximum deduction | $25,000 tips |
| 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 |
Worked Examples Comparing Federal and Ohio Treatment
Example 1: Restaurant server with $35,000 base pay + $20,000 in tips (single filer, 12% federal bracket)
Qualified tip income: $20,000
Tips deduction claimed: $20,000 (capped at $25,000)
Estimated federal tax savings: $2,400.00
Ohio return:
The federal tips deduction is taken after AGI, so this server's Ohio income still includes all $20,000 of tips. With $55,000 of total income, well above the $26,050 zero bracket, those tips carry about $550 of Ohio tax at 2.75%. No Ohio savings.
Example 2: Bartender earning $35,000 in tips (single filer, 22% federal bracket)
Qualified tip income: $35,000
Tips deduction claimed: $25,000 (capped at $25,000)
Estimated federal tax savings: $5,500.00
Ohio return:
The federal deduction is capped at $25,000 and saves federal tax only. On the Ohio return all $35,000 of tips stay in income; the capped $25,000 alone carries about $688 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. Tip income counts toward that total like other wages.
Municipal income taxes: Many Ohio cities impose local income taxes, administered separately through RITA, CCA or the city. They generally tax gross earned income, so tips are subject to them.
School district income taxes: Traditional school district taxes use Ohio income, which includes tips; earned-income-based districts tax gross earned income. Either way, the federal tips deduction does not reduce them.
W-2 reporting: Ohio employers follow the federal W-2 reporting rules for tips (Box 12 Code TP); there is no separate Ohio wage code.
Related Tools
- No Tax on Tips Calculator - calculate your federal tips deduction
- Ohio Tax Guide - full state tax overview
- Ohio Paycheck Calculator
- Does Ohio Tax Overtime?
- W-2 Code TP: Tips Reporting Guide
- W-2 Code TT: Overtime Reporting Guide
- All 51 States: Tips & Overtime Tax Map