Lima local tax guide
Who pays Lima's local tax
Location of the job sets withholding: anyone working inside Lima has 1.5% taken out, including commuters from Shawnee, American, and Bath townships and from Wapakoneta or Delphos. Lima residents owe 1.5% on wages earned anywhere, and the city gives credit for tax paid to the work city up to its own 1.5%. A resident working in a city with a rate of 1.5% or more owes Lima nothing further, but should still file so the credit is recorded. A resident whose employer is in a township pays Lima the full 1.5%.
How Lima's income tax works
Lima, a city of about 36,000, levies a flat 1.5% on wages, commissions, and business net profit. The tax is administered by the city's own Income Tax Department rather than RITA or CCA, so payments and returns go to Lima directly.
Residents are taxed on earned income from every source, while nonresidents are taxed only on work done inside the city. The base is Medicare wages, so contributions to a traditional 401(k) are included.
Much of the surrounding employment is in Allen County townships. Ohio townships do not levy a municipal income tax outside special joint districts, so township residents who work in those townships pay no city tax, and Lima residents who work there owe Lima the full rate.
Worked example: $75,000 in Lima
A single filer with a $75,000 Lima job pays $7,670 in federal income tax, $1,288 in Ohio tax, $4,650 in Social Security, and $1,088 in Medicare. Lima's 1.5% is $1,125. Take-home pay is $59,179 a year, about $4,932 a month or $2,276 every two weeks.
Compared with no municipal tax, which would leave $60,304, Lima costs $1,125. At $40,000 the Lima tax is $600, and at $100,000 it is $1,500, leaving $75,697.
The Lima tax is also smaller than the state tax at $75,000: $1,125 to Lima against $1,288 to Ohio. In a 2.5% city the order flips.
Filing with the Lima Income Tax Department
Employers in Lima withhold 1.5% and remit it to the Income Tax Department. Residents who work outside the city file a Lima return so the department can apply credit for the tax withheld by the work city.
If you live in Lima and work in a township or for an out-of-state company from home, no city tax may come out of your paycheck. Ask payroll to withhold Lima's 1.5% as a courtesy, or make estimated payments during the year.
How Lima compares with other Ohio cities
Lima and Lakewood share the lowest rate among the Ohio cities on this site. Newark's 1.75% costs $1,313 at $75,000 and Cincinnati's 1.8% costs $1,350. The 2.5% cities, including Toledo roughly 70 miles north and Dayton to the south, take $1,875, which is $750 more than Lima.
At the top of the list, Youngstown's 2.75% costs $2,063 at the same salary. That is $938 more than Lima, a gap worth checking before you accept an offer elsewhere in Ohio.
Tips for Lima paychecks
Residents working elsewhere should still file
Lima gives credit for other cities' tax only when you file, so a return protects you from a bill for the full 1.5%.
Township jobs carry no work-city tax
If your employer is in a township outside Lima, nothing is withheld for any city. Set aside 1.5% for your Lima return.
Leaving for a bigger city costs more
Moving a $75,000 job from Lima to Toledo or Dayton raises city tax by $750 a year.