Ohio’s Tax Policy Promotes a Positive Business Climate

When it comes to national rankings and studies of the best states for business, Ohio continues to accumulate accolades. In fact, Ohio ranked No. 7 in CNBC’s America’s Top States for Business in 2024, Area Development ranked Ohio No. 6 in its Top States for Doing Business 2024, and Site Selection Magazine rated Ohio No. 6 in their overall Top State Business Climate Ranking for 2024.

Despite the positive findings of many other publications and organizations, the Tax Foundation State Tax Competitiveness index ranking has once again placed Ohio toward the bottom of the list. The Tax Foundation released its 2025 State Tax Competitiveness Index report in October 2024, concluding Ohio ranks No. 35 among states.

Comparing Tax Foundation Weights to Ohio’s Business Tax Policy

*Other Business Taxes includes excise tax, business and corporate license, public utility tax, insurance tax, severance tax, and other taxes.

Understanding the Methodology

To understand how a business-friendly state like Ohio could rank toward the bottom of the report, it’s important to recognize that the Tax Foundation gives a heavier weighting to those tax types with greater variability, which does not line up with the State and Local Business Taxes Breakdown as shown above.

The chart above shows the Tax Foundation analysis could be seen as deficient when comparing how much companies actually paid by each tax category from Ernst & Young’s Total State and Local Business Taxes report.

The tax type weighted most heavily by the Tax Foundation is the Individual Income Tax at 30.5% of the overall score. Property Tax, the largest state and local taxes actually paid by businesses, carries the second lowest weight in the report at 14.9% (For reference, Ohio was ranked #6 lowest in property tax in the nation by the Tax Foundation).

What Makes Ohio Business-Friendly

The Tax Foundation’s ranking contradicts what business owners across the state know to be true: Ohio is a business-friendly state. In fact, Ohio is one of only a handful of states in the U.S. with no state level corporate income tax and no personal property tax.

Additionally, Ohio’s gross receipts tax is a low 0.26%, exempts the first $6 million in receipts, and is only levied on in-state sales. Ohio also has no inventory tax, no business personal property tax, and no business franchise tax. Ohio has lowered state personal income taxes in recent years and continues to do so in 2025. However, Ohio has a progressive income tax, creating an automatic disadvantage in the recent Tax Foundation rankings based on their metrics.

Taxes are not the only consideration for business operating costs. Businesses in Ohio would point out that this state is easily one of the best locations when all business cost factors are considered. Ohio has a skilled workforce of 5.5 million, competitive wages, central location, advanced infrastructure, and construction costs that are 9.7% lower than the U.S. average.

While the Tax Foundation may never come to see Ohio for the exceptional business climate that it has, Ohio’s reputation for being business-friendly is supported by countless positive rankings by other agencies, organizations, and publications across the nation and, perhaps most importantly, by the businesses that have chosen to grow within its boundaries and call it home.