Selling a business in Ohio: what the state takes (2026)
Ohio’s top individual income tax rate is 2.75%. Here is what an owner selling company stock pays, with 2026 rules from official sources and worked examples at $10 million, $25 million and $50 million.
- 2.75%
- Top Ohio income tax rate (2026)
- $742,500
- State tax on a $25M long-term gain
- 26.8%
- Combined federal and state rate on $25M
- 37 of 51
- Rank by total tax on $25M (1 = highest)
How Ohio taxes a business sale
- Income tax
- Top rate 2.75%: Over $26,050 (nonbusiness income, all filers); business income is taxed at a flat 3% after a $250,000 deduction.
- Long-term capital gains
- For an owner who materially participated in the business in the year of sale or any of the five prior years, Ohio classifies gain on the sale of the ownership interest as business income (ORC 5747.01(B)): the first $250,000 is deducted and the rest is taxed at a flat 3%. The examples use that treatment. A passive investor's gain is nonbusiness income taxed at 2.75%.
- Relief that applies only in some sales
- From tax year 2026, ORC 5747.79 allows a deduction equal to the lesser of the capital gain or 'deductible payroll' when the seller materially participated for the five years before the sale and the company was organized and headquartered in Ohio for those five years. Deductible payroll is the company's Ohio-withholding payroll over the prior five calendar years, excluding pay to the seller and close family, times the percentage of the company sold. For an Ohio-headquartered lower-middle-market company with real payroll, this can remove much or all of the gain from tax. Passive holders who did not materially participate are instead taxed at 2.75% as nonbusiness income. HB 617, a full capital gains exemption, was introduced in Dec 2025 and is still in House committee.
- Entity-level taxes
- Ohio has no corporate income tax; businesses pay the commercial activity tax (CAT) on gross receipts instead, and S corps are not taxed on income at the entity level.
- Local taxes
- Municipal income taxes exclude intangible income such as capital gains (ORC 718.01), except in a few municipalities grandfathered since 1988. Traditional-base school district income taxes apply to Ohio AGI with the $250,000 business income deduction added back, so they reach the full gain. The highest 2026 traditional-base rate is 2.0% (Covington EVSD, Fairfield Union LSD, Oberlin CSD, Yellow Springs EVSD). Earned-income-only school districts do not tax gains.
Three worked examples
| Long-term gain | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|
| Federal capital gains tax (20%) | $2,000,000 | $5,000,000 | $10,000,000 |
| Net investment income tax (3.8%) | $380,000 | $950,000 | $1,900,000 |
| Ohio tax | $292,500 | $742,500 | $1,492,500 |
| Total tax | $2,672,500 | $6,692,500 | $13,392,500 |
| Effective combined rate | 26.72% | 26.77% | 26.78% |
| Net proceeds after tax | $7,327,500 | $18,307,500 | $36,607,500 |
| Extra tax versus Texas | $292,500 | $742,500 | $1,492,500 |
Seller’s tax calculator
Estimate federal and state tax on a stock sale and what is left before fees and debt.
- Long-term capital gain
- $25,000,000
- Federal capital gains tax (20%)
- $5,000,000
- Net investment income tax (3.8%)
- $950,000
- Ohio tax
- $742,500
- Gain excluded or deducted
- $250,000
- Taxable gain at 3%
- $742,500
- Total tax
- $6,692,500
- Effective rate on the gain
- 26.77%
- Net proceeds after tax
- $18,307,500
Not included: Ohio traditional-base school district income tax (top 2.0%) residents pay up to 2% on top, about $500,000 on this gain.
Illustration, not tax advice. Assumes a resident individual, the whole gain long-term, top marginal rates, no state credits, installment terms, QSBS exclusion or other planning, and no local taxes. Net proceeds are before transaction fees, debt repayment, escrows and earn-outs. Rates are for tax year 2026 where published; see the methodology.
Compare with other states
Neighboring states
- Indiana26.8% combined, $18.31M net
- Kentucky27.3% combined, $18.18M net
- Michigan28.1% combined, $17.99M net
- Pennsylvania26.9% combined, $18.28M net
- West Virginia28.4% combined, $17.91M net
Common comparisons
- California37.1% combined, $15.72M net
- New York34.1% combined, $16.48M net
- Texas23.8% combined, $19.05M net
- Florida23.8% combined, $19.05M net
- Nevada23.8% combined, $19.05M net
- Washington33.5% combined, $16.63M net
- Tennessee23.8% combined, $19.05M net
Methodology and sources
Ohio figures are for tax year 2026. 2026 rate set by statute (ORC 5747.02(A)(3)(c), as amended by HB 96 of 2025): flat 2.75% on nonbusiness income over $26,050 for taxable years beginning in 2026 and later; business income stays at 3%. The examples assume a resident individual selling privately held stock for a long-term gain equal to the sale price (zero basis), with every dollar taxed at the top marginal rates, the federal 20% capital gains rate and the 3.8% net investment income tax, and no planning, credits or local taxes. Full assumptions are in the report methodology.
All 50 states and DC with source URLs.
- 1Ohio Revised Code 5747.02 (rates; 2026 flat 2.75%, business income 3%)
- 2Ohio Revised Code 5747.01 (business income incl. sale of ownership interest; $250,000 business income deduction)
- 3Ohio Revised Code 5747.79 (deduction for capital gains from sale of business, TY2026+)
- 4Ohio Revised Code 718.01 (municipal exclusion of intangible income)
- 5Ohio Department of Taxation, school districts with an income tax, effective Jan 1, 2026
- 6Ohio Department of Taxation, SD 100 school district return (traditional base = Ohio AGI plus business income deduction add-back)
- 7Ohio House, HB 617 status (capital gains repeal, in committee)
- 8Tax Foundation, State Individual Income Tax Rates and Brackets, 2026. Secondary source
Data last updated October 26, 2026.
Cite this research
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Citation
Laurent Capital Research, “The Seller’s Tax Map: What Selling a Business Costs in Every State (2026): Ohio,” 2026, https://laurent.capital/research/seller-tax-map/ohioLink (HTML)
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