Moving from Canada to Ohio: State Tax, City Tax, and Cross-Border Planning

Ohio has quietly become one of the friendlier states on paper for state income tax. After House Bill 33 collapsed the bottom brackets in 2023, a large chunk of income is now taxed at 0% before the remaining brackets top out at 3.5%, down from a former top rate of 3.99%. That sounds like good news for anyone moving from Toronto, Ottawa, or elsewhere in Ontario for a job in Columbus, Cleveland, or Cincinnati. But Ohio has a feature most states don’t: local municipal income tax, layered on top of the state rate, in nearly every city of any size. The state tax line is only half the picture here.

How does Ohio’s tax compare to provinces?

Ohio’s graduated brackets top out at 3.5%, well below every Canadian province’s top marginal rate.

Jurisdiction	Top rate	Notes
Ontario	~20.5% (with surtax)	On income above $220,000
BC	20.5%	On income above $252,752
Alberta	15%	On income above $355,845
Quebec	25.75%	On income above $126,000
Ohio (state only)	3.5%	On income above roughly $115,300

On its own, that comparison undersells what actually lands on an Ohio pay stub, because it leaves out the municipal layer covered below. On $150,000 of employment income, Ohio’s state tax alone runs somewhere in the $3,000 to $3,800 range after the 0% band absorbs the first slice. Add a 2.5% city tax in Columbus or Cleveland and the combined state-plus-city bill climbs to roughly $6,700 to $7,500. Ontario provincial tax on the same income would run closer to $17,000 to $19,000 CAD. Ohio still comes out well ahead of any province, but the gap is narrower than the state bracket alone suggests.

How do Ohio’s municipal income taxes work?

This is the part that catches most people off guard, because almost no other state does it this way. Ohio has roughly 600 municipalities that levy their own income tax, and the major metro areas all charge close to the maximum typical rate:

• Columbus: 2.5%
• Cleveland: 2.5%
• Akron: 2.5%
• Dayton: 2.5%
• Toledo: 2.5%
• Cincinnati: 1.8%

The tax applies to wages earned while working in the city, and most employers withhold it automatically based on the work location. If you live in one Ohio municipality and work in another, you generally owe tax to the city where you work, plus your resident city can require its own tax on the same income, usually with a credit for what you paid to the work city. Whether that credit is full or partial depends on the resident municipality’s ordinance, and this is where a lot of Ohio movers get their withholding wrong in year one. A suburb like Dublin, Westerville, or Gahanna near Columbus, or Shaker Heights near Cleveland, often has its own municipal rate in the 1.5% to 2.5% range, separate from the city you commute into.

Two collection agencies handle most of this administratively: RITA (Regional Income Tax Agency) covers a large share of Ohio municipalities, and CCA (Central Collection Agency) handles Cleveland and several others. Some cities, including Columbus, administer their own tax directly rather than through either agency. The upshot is that where you choose to live inside a metro area, not just which metro area you move to, changes your effective tax rate in Ohio in a way it simply doesn’t in most other states.

On top of city tax, some Ohio school districts levy their own income tax (typically 0.5% to 2%), which is reported and collected through the state return (Ohio form SD-100) rather than through the municipal system. It’s a separate layer again, tied to your school district of residence rather than your work location.

How does Ohio treat the RRSP?

Ohio starts from federal adjusted gross income, so it inherits whatever the treaty already resolved federally. The RRSP treaty deferral under Article XVIII keeps the account’s growth out of federal AGI while it stays deferred, so Ohio doesn’t tax it during that period either. When you eventually take distributions, they show up in federal AGI and flow through to the Ohio return at the applicable state bracket, plus municipal tax if the distribution counts as taxable income under your city’s ordinance (many Ohio municipalities exempt unearned and retirement income from the city tax base entirely, since city tax generally targets earned income).

Ohio does offer a modest retirement income credit, worth up to $200 for taxpayers with qualifying retirement income between $500 and $8,000, but it’s a small credit on a sliding scale rather than a broad exemption like some other states offer for retirement distributions. Don’t count on Ohio to meaningfully shelter RRSP withdrawals the way Illinois does; plan the RRSP drawdown on its federal treatment first.

TFSA income is taxable federally with no treaty shelter and flows straight through to the Ohio return. The standard advice to close the TFSA before you leave Canada still applies here.

What happens on the Canadian side?

Leaving Ontario for Ohio triggers the same departure sequence as any Canada-to-US move:

• Deemed disposition at fair market value on worldwide property
• A final Canadian return covering January 1 through the departure date
• Provincial tax at Ontario’s rates for the period you were still resident
• T1161 and, where the deemed disposition gain crosses the threshold, T1243
• Notifying the CRA of your change to non-resident status
• RRSP stays open and deferred; TFSA gets closed before departure

On the US side, your first year is usually where the dual-status vs. full-year election decision matters most, since it changes which deductions and filing status you can use for the arrival year, and it interacts with how much of your Ohio-source income gets picked up on the state part-year return.

What other taxes does Ohio have?

Beyond income tax, a few other Ohio taxes matter for anyone settling in or running a business there:

• Commercial Activity Tax (CAT): a gross receipts tax on businesses with more than $150,000 in annual Ohio gross receipts. It sits alongside, not instead of, the regular corporate and pass-through income tax picture, and it catches businesses that might otherwise think they’re too small to owe Ohio business tax.
• Sales tax: 5.75% at the state level, with counties and transit authorities adding their own rate on top, bringing most combined rates to somewhere between 7% and 8% depending on the county.
• Property tax: no state-level property tax, but local effective rates typically run around 1.5% to 1.6% of market value, assessed and collected at the county level. That’s noticeably higher than most Ontario municipalities’ effective rates in the 0.6% to 1.2% range.
• Estate and inheritance tax: Ohio repealed its estate tax effective January 1, 2013, and it has no inheritance tax. For a Canadian moving in with a sizable estate, that removes a planning layer that states like Illinois or Washington still require.

How does Ohio compare to nearby states?

For Canadians weighing Ohio against neighboring options, the shape of the tax burden differs more than the headline rates suggest:

• Michigan: a flat 4.25% state rate, and Detroit adds its own 2.4% city tax on residents (lower for non-residents working there). Michigan’s state rate alone is higher than Ohio’s top bracket, but Michigan has far fewer cities with a municipal tax than Ohio does.
• Pennsylvania: a flat 3.07% state rate, but nearly every Pennsylvania municipality and school district layers on a local earned income tax, commonly around 1%, with Philadelphia’s wage tax running close to 3.75% for residents. Pennsylvania’s local-tax sprawl is arguably even more granular than Ohio’s, since it applies almost everywhere rather than mainly in cities.
• Illinois: a flat 4.95% state rate with no city income tax anywhere, including Chicago. Illinois trades a higher flat state rate for the simplicity of no municipal layer, the opposite tradeoff from Ohio.

Put side by side, Ohio’s state bracket is the lowest of the group at the top end, but once you add in a 2.5% city tax for Columbus or Cleveland, the combined state-plus-local burden lands in a similar range to Michigan-plus-Detroit or a mid-size Pennsylvania municipality. The real driver of your total tax bill in Ohio isn’t the state bracket, it’s which specific municipality you end up living and working in.

What should I do next?

The Canadian exit is the same regardless of which US state you land in: work through the departure checklist before you go. On the Ohio side, the one thing that’s genuinely different from most other states is the municipal layer, so get clear on the exact city and school district you’ll be living in, not just the metro area, before you sign a lease or make an offer on a house.

• Departure tax checklist, the full Canadian exit sequence
• Canada departure tax: T1161 and T1243, the deemed disposition forms
• US-Canada tax treaty explained, how Article XVIII protects the RRSP
• RRSP and TFSA on a US move, what to keep open and what to close
• First US tax return after moving from Canada, the arrival-year mechanics
• Dual-status vs. full-year election, the first-year filing choice
• State income tax for cross-border filers, how state rules generally interact with the treaty
• Moving from Ontario to Michigan, the neighboring-state comparison
• Moving from Canada to Illinois, the flat-rate, no-city-tax alternative
• Moving from Canada to Indiana, another low-rate Midwest state with county income taxes
• Moving from BC to California, for contrast against a state that taxes the RRSP more aggressively
• Moving from Canada to Kentucky, the neighboring reciprocity state with a flat 4% rate

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.