Hamilton local tax guide
Who pays Hamilton's local tax
Hamilton withholds 2% from everyone working inside the city, whether they commute from Fairfield, Oxford, Trenton, or across the state line in Indiana. Residents owe Hamilton 2% on wages earned anywhere, with RITA applying a 100% credit for tax paid to the work city, capped at 2%. A resident working in Dayton has 2.5% withheld there and owes Hamilton nothing. A resident working in Cincinnati has only 1.8% withheld, so Hamilton collects the difference when the return is filed, $150 on a $75,000 salary.
How Hamilton's 2% tax works
Hamilton, a city of about 62,000 on the Great Miami River, levies a flat 2% on wages, salaries, commissions, and business net profit. It is a RITA member, so the Regional Income Tax Agency handles Hamilton returns, estimated payments, and refunds.
The tax is figured on Medicare wages. Contributions to a traditional 401(k) remain in that number, which means saving for retirement does not reduce what you pay Hamilton.
Indiana residents who work in Hamilton can stop Ohio state withholding with Form IT 4NR under the two states' reciprocity agreement, but the agreement does not reach city tax. Hamilton's 2% is still withheld from their pay.
Worked example: $75,000 in Hamilton
At $75,000 a single filer pays $7,670 in federal income tax, $1,288 in Ohio tax, $4,650 in Social Security, and $1,088 in Medicare. Hamilton adds $1,500. Take-home pay is $58,804 a year.
A worker with no municipal tax would keep $60,304, so Hamilton costs $1,500 at this salary.
Commuting south changes little. A Hamilton resident earning $75,000 in Cincinnati pays Cincinnati $1,350 and Hamilton the other $150, so the total city tax is the same $1,500 as a job at home. Commuting north to Dayton costs more, because Dayton withholds $1,875 and Hamilton cannot refund the $375 difference.
Filing and withholding
Employers in Hamilton withhold 2% and send it to RITA. A resident working in Cincinnati can ask payroll to withhold the small Hamilton balance as a courtesy, or pay it on RITA Form 37 or through RITA's online account by the April deadline.
Nonresidents who work part of the week from home outside Hamilton can ask RITA for a refund of the Hamilton tax withheld for those days. A day-by-day record of work locations is the evidence RITA needs.
How Hamilton compares with other Ohio cities
Hamilton's 2% is the same as Dublin, Mansfield, and Cuyahoga Falls and lower than 13 other Ohio cities on this site. Dayton and the other 2.5% cities take $1,875 at $75,000, and Youngstown's 2.75% takes $2,063.
Cincinnati, the region's anchor city, charges 1.8%, or $1,350, which is $150 less than Hamilton. Lima and Lakewood are the cheapest listed cities at 1.5%.
Tips for Hamilton paychecks
Cincinnati commuters owe a little extra
At $75,000, a Hamilton resident working in Cincinnati owes Hamilton $150 at filing unless payroll withholds it.
Indiana residents still pay Hamilton
Form IT 4NR stops Ohio state tax for Indiana commuters, but Hamilton's 2% city tax is withheld regardless.
Price in Dayton's higher rate
A job in Dayton costs a Hamilton resident $375 more in city tax at $75,000, because Hamilton's credit cannot exceed its own 2% rate.