Tax Info and other Misc Costs of moving (Cleveland, Dayton: sales, real estate)

[dmsak]

My husband flies out for a 2nd interview next week for a job near Dayton. I was reading another, albeit older, post about taxes in Ohio. We would be moving from FL which does not have local/city taxes or a state income tax... plus our property taxes are lower. Is there a web site that provides the tax percentage for the different Ohio cities? If he is offered a job, I want to make sure that we keep all of this information in mind before he makes a decision. Seems like right off the bat we would need to make sure, at a minimum, that the salary is about 6-7% more than what he makes now, just to be comparable.

Also, are there any other "gotchas" about living in Ohio that might impact us financially?

[tigerlilly31415]

Not sure about the local income taxes, but if you're looking for property tax info, you can use:

Montgomery County

to look up the taxes for addresses in Montgomery County, or

Greene County Property Search

to look up taxes on properties in Greene County.

Hopefully someone else can comment on the other tax info.

[dmsak]

Thanks for the links!!

[hensleya1]

1) Local income tax varies but it goes like this: you pay first to the city you work in, and second to the city you live in. Almost 100% of the time, the home city will give you a credit equal to the amount paid in the city you work in, so you don't get double taxed. There's a couple exceptions to that rule (Oakwood only does a partial credit?).

To avoid the local tax entirely you must both live and work in a non-taxing locality - either a city that doesn't have an income tax (Beavercreek or Bellbrook) or an unincorporated township.

The only real "gotcha" is when you work in a non-taxing area and live in one that does charge a local tax. (In Dayton, the lion's share of high paying jobs in a non-taxing area are located on WPAFB - you'll notice that the non-taxing cities are packed to the brim with WPAFB employees for this reason.)

2) Income taxes have dropped significantly in Ohio (thanks to John Kasich) but the code has become no less complex - there's like 12 income brackets plus all sorts of carve outs - but a fair ballpark amount of state tax would be in the 3% range. It used to be more like 6%.

3) Sales tax varies by county, too - Montgomery County is 7.25% and Greene County is 6.75% - that's because Montgomery County subsidizes public transportation through the sales tax.

[ohio_peasant]

Great summary, Hensleya! I'd add a few details:

1. Some jurisdictions have a second income tax, called "school district income tax". Townships can't level a conventional local income tax, but if they belong to a geographic local feeding into a school district with such a tax, then the township's residents are subject to the tax. Example: lots of townships in Greene County are part of the Xenia School District. The townships don't themselves have a local income tax, but residents pay a 0.5% school district income tax to Xenia.

2. Borders between districts are convoluted and obscure; zip codes don't tell the story. Check carefully when considering a candidate residential property.

3. Be wary of "lower cost of living" areas; often they have higher taxes, because if most residents are poorer, tax rates have to be higher, to produce the requisite amount of revenue. The great exception seems to be Oakwood, which is both affluent (by local standards) and high-tax. So, for a more affluent household (by income), the total cost of living might actually be lower in a more affluent suburb, than in one with lower real estate prices.

4. There seems to be an insidious rule, that housing prices rises higher, where it is already high; and it remains static or actually falls, where it is already low. For this reason again, it pays to buy in a more affluent area.

[jlawrence01]

Originally Posted by dmsak

My husband flies out for a 2nd interview next week for a job near Dayton. I was reading another, albeit older, post about taxes in Ohio. We would be moving from FL which does not have local/city taxes or a state income tax... plus our property taxes are lower. Is there a web site that provides the tax percentage for the different Ohio cities? If he is offered a job, I want to make sure that we keep all of this information in mind before he makes a decision. Seems like right off the bat we would need to make sure, at a minimum, that the salary is about 6-7% more than what he makes now, just to be comparable.

Also, are there any other "gotchas" about living in Ohio that might impact us financially?

I am a retired CPA. While my specialty was NOT taxes, I would like to clarify a few things about the Ohio taxation system. While Gov. Kasich has done a decent job reducing taxes, he has not addressed the great complexity of the state and local tax system.

First, as an employee, you pay state income taxes. Honestly, I have not kept up with the rates these days but you can easily find the rates on the Ohio Department of revenue website. Generally, in Ohio, you get to the top rate very quickly so that if you have two people working, most of your income will be taxes at the highest marginal rates.

Second, MOST municipalities assess an income tax on all residents with EARNED income as well as non-residents who work within that municipality. For example is you live in the city of Lakewood, OH and work in Cleveland, you will pay local taxes to Lakewood as a RESIDENT and to Cleveland as an EMPLOYEE in that city. Some BUT NOT ALL cities do give a credit on taxes paid to another city BUT not always and sometimes as little as 25%. My last year in Ohio, I was paying 2.0% to my employment city PLUS 1.5% to my resident city. This was one of the reasons I relocated from Ohio to Illinois where there were no local income taxes and a 3% state income tax rate.

Third, if you work in multiple communities (i.e., free-lancer, musician, etc.), you will need to file local returns in each on of those communities. This is generally where people pop in and say "most communities are covered by RITA or CCA, multi-city tax collectors". That is true to a point but there are many that aren't.

Fourth, the state taxes are unique. Often, you can save money filing as a "married filing separately" as opposed to filing a joint return. The problem with doing that if it may disqualify you from certain federal tax provisions. I was always faced with the decision, am I better off paying $600 in additional state income tax and file MFJ or should I file MFS and forego the federal benefits?

Part of my compensation package included the preparation of my federal and state tax returns by a local CPA firm which cost the company about $650 a year due to the multiple returns and the like. When I moved to Illinois, I was paying $240.

In my opinion, if you are moving from Florida to Ohio, you need at least 6-8% just to cover the state and local income taxes. However, you should also factor in property taxes but that is another discussion.

[dmsak]

Thanks for the additional information. I did tell my husband that we definitely need to ensure he is compensated for the additional taxes in Ohio, including the higher property taxes. I never realized Ohio was taxed so high!

[jlawrence01]

Originally Posted by dmsak

Thanks for the additional information. I did tell my husband that we definitely need to ensure he is compensated for the additional taxes in Ohio, including the higher property taxes. I never realized Ohio was taxed so high!

Neither did I. When I moved to Cleveland from St. Louis, it was rather discouraging to find that I was taking home LESS. Do realize that you hav some control over local taxes. Many unincorporated areas (usually referred to as townships) do not have local taxes.

[ohio_peasant]

Originally Posted by dmsak

I never realized Ohio was taxed so high!

It's high compared to elsewhere in the Heartland or the South. But my state/local taxes fell substantially when I relocated to Ohio from California. They're also much lower than what my parents used to pay in New York City.

For somebody living in say Cleveland, it might be possible to enjoy a lifestyle approximating that of the urbanized Coasts, with a lower cumulative tax burden. Then taxes will feel low. For somebody living on remote acreage in rural Ohio, taxes will feel high and burdensome, compared to what one might have been paying say in rural Texas.

[notnamed]

Taxes are definitely one of the reasons why I left Ohio. Every year there was a levy on the ballot to increase them too. I learned my lesson to pay attention to such taxes rather than solely focus on the house/neighborhood when buying. I took my existing job with me to WA and effectively got a 10%+ raise due to the lower taxes out here. No state/local income taxes and half the property tax rate. We're looking at buying new construction this time around and prices are pretty much the same too. Government services and schools are much better here than where we were in Ohio and here for the very first time I saw a ballot initiative to reduce taxes.