Ohio tipped wage and tips tax calculator for 2027

Ohio’s tipped wage is half the state minimum, but only at larger employers: from January 1, 2027 it is $5.70 against $11.40 at businesses with gross receipts over $420,000. Tips remain taxable on the IT 1040.

Your Ohio tips

State where you work Qualified tips this year

Voluntary cash and card tips on your W-2, 1099 or Form 4137 — not service charges.

Tax year

2025202620272028

Filing status Other income in your AGI

Wages without the tips, plus any other income (both spouses if filing jointly).

Your occupation The 71 Treasury Tipped Occupation Codes in the final rule (TD 10044).

How you are paid

Employee (W-2) Self-employed (1099)

More options

Itemized deductions (if larger than the standard deduction)

State marginal rate override (%) Leave blank to use the state’s published rate for your bracket.

Federal income tax saved in 2026Deduction $18,000 at 12% $2,160

$18,000 of the $25,000 cap used (72%)

Qualified tips	$18,000
After the $25,000 cap	$18,000
Income phase-out (MAGI $48,000)	$0
Tips deduction	$18,000
Federal tax before → after	$3,580 → $1,420
Social Security & Medicare still due on tips	$1,377
Ohio 2026: Tips stay taxable in this state	$0
Total income tax saved	$2,160

What the estimate leaves out

Two tiers of employers

The Ohio Department of Commerce announced a 3.5% increase for 2027 — $11.40 for non-tipped and $5.70 for tipped employees — and raised the business threshold from $405,000 to $420,000 of annual gross receipts. At smaller employers, and for 14- and 15-year-olds, the state rate stays tied to the federal $7.25, so an FLSA-covered small restaurant may still pay $2.13 in cash.

Ohio figures

Employers with annual gross receipts over $405,000	$5.50 / $11.00
Smaller employers covered by the FLSA	$2.13 / $7.25
In force	July 1, 2026 – December 31, 2026
Next change	January 1, 2027: $5.70 / $11.40; $2.13 / $7.25
Tipped threshold	More than $30 a month in tips
Tips on the 2025 return	tips stay taxable in this state. The IT 1040 starts from federal AGI; the below-the-line tips deduction never reaches it and Ohio has no tips deduction. Source: Ohio Department of Taxation
Tips on the 2026 return	tips stay taxable in this state. No Ohio tips exemption had been enacted when we checked. Source: Ohio Department of Taxation

Ohio income tax on tips

The IT 1040 begins with federal adjusted gross income, and Ohio has not enacted a deduction to match the federal one, so qualified tips stay in Ohio income for 2025 and 2026. Ohio municipal income taxes are separate and are not estimated here.

A Columbus server at a large chain

A $17,000 federal deduction saves $1,970; Ohio taxes the tips. In 2026, 30 hours at $5.50 pay $165; with $120 of tips the employer owes $45 to reach $330.

Check an Ohio workweek (large or small employer)

State Workweek date

Employer type or region

Hours worked this week Tips kept this week

Hourly cash wage you were paid

Leave blank to assume the legal minimum cash wage.

Employer make-up owed$5.50 cash wage + tips must reach $11.00 an hour. $26

Minimum for the hours	$352
Cash wage paid	$176
Tips counted toward the minimum	$150
Your effective hourly pay	$11.00

How the make-up rule works

Where these figures come from

Federal rules: how the deduction works. Nearby: Michigan, Pennsylvania, West Virginia, Kentucky, Indiana.

Figures verified against primary sources on October 5, 2026