Does Ohio charge sales tax on services?
by October 9, 2023
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
Almost every US state requires sellers to charge sales tax on tangible personal property, also known as physical goods. Many states also implement sales and use tax on digital goods and SaaS offerings. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services as well.
Here’s what merchants need to know about taxing services in the state of Ohio.
Are services subject to Ohio sales tax?
Many services are subject to Ohio’s 5.75% sales tax rate:
- Rental of hotel rooms or similar sleeping accommodations for less than 30 days by establishments with five or more sleeping rooms
- Provision of landscaping or lawn care service, if annual sales of this service equal or exceed $5,000
- Providing private investigation or security service
- Supplying information service through use of a nine-hundred telephone call
- Production of tangible personal property from material supplied by the customer, like a tailor using fabric furnished by the customer
- Building maintenance and janitorial service, if annual sales of this service equal or exceed $5,000
- Exterminating service
- Physical fitness facility service
- Recreation and sports club service
- Repair of tangible personal property (except repair of property which is exempt from sales tax)
- Installation of tangible personal property (except installation of property which is exempt from sales tax)
- Washing (except coin-operated), cleaning, waxing, polishing, or painting of motor vehicles
- Towing service for motor vehicles
- Laundry and dry cleaning service, excluding sales made through coin operated machines
- Automatic data processing, computer services, or electronic information services provided for use in a business. Electronic information services include internet access charges and e-mail service charges for use in a business
- Certain telecommunication services
- Satellite broadcasting service
- Personal care service, including skin care, application of cosmetics, manicures, pedicures, hair removal, tattoos, body piercing, tanning, massage and other similar services. This does not include hair cutting, coloring, and styling
- Transportation of persons, within Ohio, except by public transit systems or commercial airlines
- Snow removal service, if annual sales of this service equal or exceed $5,000
- Storage of tangible personal property (except such property that the consumer of the storage holds for sale in the regular course of business)
Professional, personal, and insurance transactions are not subject to sales tax when any transfer of tangible personal property is a small item for which no separate charge is made.
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be taxed. For an in-depth look at sales tax in Ohio, TaxJar’s guide to sales tax in Ohio and the Ohio Department of Taxation has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
