If your small business has employees working in Ohio, you must pay Ohio unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. (In Ohio, state UI tax is just one of several taxes that employers must pay. Other important employer taxes, not covered here, include federal UI tax and state and federal withholding taxes.)
Different states have different rules and rates for UI taxes. Here are the basic rules for Ohio's UI tax.
As an Ohio employer subject to UI tax, your small business must establish a UI tax account with the Ohio Department of Job and Family Services (JFS). You must register for a UI tax account as soon as you employ at least one person covered by Ohio's unemployment compensation law. Once registered, you'll be issued an Unemployment Compensation (UC) tax account number.
You can register for an account with JFS either online or on paper. To register online, use the Employer Resource Information Center (ERIC). To register on paper, use Form JFS-20100, Report to Determine Liability. Blank forms are available for download from the Forms section of the JFS website. No fee is required to register your business with JFS.
In Ohio, you generally are considered a liable employer under the Ohio unemployment compensation law if you meet either of the following requirements:
These are effectively the same rules that apply for liability under the Federal Unemployment Tax Act (FUTA). In fact, apart from the above two requirements, if you have been subject to FUTA in the current or preceding calendar year, you are liable for Ohio UI tax. So does acquiring a business that already was subject to Ohio's UI law.
Different rules, not covered here, apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.
State UI tax payments generally can be credited against your FUTA taxes.
UI tax is paid on each employee's wages up to a maximum annual amount. That amount, known as the "taxable wage base," has been stable for several years at $9,000 in Ohio (current as of 2024). However, it's always possible the amount could change.
The state UI tax rate for new employers, or the "standard beginning tax rate," can change from one year to the next. In recent years, however, it has been stable at 2.7%. (Except for new employers in the construction industry, who are subject to a significantly higher beginning rate.)
Established employers are subject to a lower or higher rate than new employers depending on an "experience rating." This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.
In Ohio, UI tax reports and payments must be filed no later than the last day of the month following the close of the calendar being reported. In other words, reports and payments are due as follows:
The report must be postmarked by the next business day if the due date falls on a Saturday, Sunday, or holiday.
The report you need to file consists of two sections, the Wage Detail and the Quarterly Summary. The two sections are considered a single report for filing purposes.
You must file quarterly returns even if you had no employees and paid no wages during the quarter. In such cases, you must file a report indicating that you had no employment. You will be subject to a penalty if you fail to file.
You must post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees. The poster states that your business provides unemployment compensation coverage for employees and provides basic information on how an employee can file an unemployment claim.
You can download a notice (Form JFS-55341) from the JFS website that meets all legal requirements.
Employers who use independent contractors rather than hiring employees aren't subject to the UI tax. But it's important that you don't misclassify an employee as an independent contractor. If you misclassify an employee, you could be penalized or fined.
You may decide that it's easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes an outside payroll company makes.
This article touches on only the most basic elements of Ohio UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and JFS websites for the latest information.
JFS also publishes a helpful Unemployment Compensation Guide that you can download from the JFS website.
In addition to state UI tax, employers have other responsibilities not covered in this article, such as federal UI tax, state and federal withholding taxes, and required reporting of new hires. Talk to a tax lawyer or employment attorney to learn more.