Ohio Capital Gains Tax Rate (2026)
Ohio capital gains tax overview
Ohio has a 0% bracket up to $26,050 and 2.75% above. Municipalities add local income tax (typically 1–2.5%). Ohio has a small Business Income Deduction for pass-through income.
Federal + Ohio combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what an Ohio investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Ohio State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 2.75% | 2.75% | 6.55% |
| 15% | 2.75% | 17.75% | 21.55% |
| 20% | 2.75% | 22.75% | 26.55% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Ohio does not have an equivalent.
How Ohio compares to other states
Ohio's top rate of 2.75% places it in the lower-middle tier of state capital gains taxation. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Ohio: 2.75% — total with 15% federal = 17.75%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Ohio residents
With a top state rate of 2.75%, minimizing capital gains tax is particularly important in Ohio. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%). Ohio does not offer a preferential state rate, but federal savings alone are often 7–17%.
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 24% ($4,700) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Ohio state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Detailed Ohio capital gains tax rules
Tax history and legal basis
Ohio taxes capital gains as ordinary income with a progressive system. The state exempts the first $26,050 of income entirely (effective 2024).
Exemptions and special treatment
Ohio exempts the first $26,050 of taxable income from state tax for all filers. Above that, rates range from 2.75% to 3.5%. Ohio also offers a Business Income Deduction (BID) of up to $250,000 that can apply to certain self-employment capital gains. Local school district taxes (0.5-2%) may also apply.
Filing requirements
File Form IT 1040 (resident). Ohio starts with federal AGI. School district income tax requires a separate form (SD 100). Estimated payments required if owing $500+. Filing deadline is April 15.
Recent changes and legislative updates
Ohio significantly simplified its rates in 2024: eliminating the first two brackets and dropping the top rate to 2.75%. The $26,050 exemption means most moderate-income Ohioans with small capital gains may owe nothing at the state level. The Business Income Deduction is particularly valuable for small business owners selling their companies.
Worked example: $50,000 capital gain in Ohio
Here's exactly what an Ohio resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Ohio state tax (2.75%) | −$1,375 | Applied to the full gain amount |
| Total tax owed | −$8,875 | Federal + state combined |
| You keep | $41,125 | 82.25% of your gain |
After both federal and Ohio state tax, you keep $41,125 of your original $50,000 gain. The effective combined rate is 17.75%.
Frequently asked questions — Ohio
Does Ohio tax short-term and long-term gains differently?
No — Ohio taxes both short-term and long-term capital gains as ordinary income at the same rates as wages. There is no state-level preferential rate for patience. The federal system, however, taxes long-term gains at 0/15/20% vs. up to 37% for short-term — a significant difference that applies regardless of state.
Do I need to file an Ohio tax return if I only have capital gains?
If you have capital gains income and meet Ohio's filing threshold, you are required to file an Ohio state income tax return. The threshold is typically similar to the standard deduction amount — check the OH Department of Revenue for the current year's filing requirements.
What if I moved to Ohio mid-year?
If you moved to Ohio during the year, you are a part-year resident. Ohio generally taxes capital gains realized while you were an Ohio resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.