Municipal Income Tax Facts
RITA is not a "municipality," and cannot levy its own income tax - there is actually no such thing as the "RITA Tax." Rather, the municipal income taxes that RITA administers belong to each of the Ohio cities and villages that have joined with RITA. The income tax is created by the laws of each municipality, and RITA administers these taxes on their behalf.
The municipal income tax in Ohio is levied on:
Individuals that live in municipalities
Individuals that earn taxable income in municipalities
Net Profit Tax
Businesses that earn taxable income in municipalities
Many individuals in Ohio work in a municipality that has an income tax, and live in a different municipality that also has its own income tax.
- Individuals always owe municipal income tax to the municipality where they work (this is called “work place tax”), but they may or may not owe income tax to the municipality where they live (this is called “residence tax”). Most individuals have the tax owed where they work automatically withheld by their employer.
- The Ohio municipality where you live has the right to determine whether to grant a “credit” to its residents who pay income taxes to other municipalities. This “residence tax credit” reduces the income tax residents owe to the city or village where they live when they earn their taxable income in another municipality.
- RITA provides a Tax Rates table that indicates for every RITA member whether, and to what extent, that member provides a “residence tax credit” for its residents. Some individuals that owe “residence tax” will also have that withheld automatically by their employer (employers are usually not required to do this, but may do so as a courtesy to their employees).
- Other individuals may have to make estimated payments of their residence taxes each year. Of course, if an individual lives and works in the same municipality, the “residence tax credit” is not needed. Residents in these situations only owe tax to one municipality – the one in which they both live and earn their taxable income.