Consumer taxes are typically higher for consumer goods or services that are either unhealthy or not considered essential, such as cigarettes and liquor. Gasoline taxes generally fund highway construction and maintenance, while sales tax revenue usually goes into the state's general fund. Ohio consumer tax laws place a relatively high tax rate on cigarettes and spirits.
The basic provisions of Ohio consumer tax laws are listed in the following table, and the article below contains further information on the subject. See Illinois Tax Laws for related articles and resources.
|Sales Tax||5.75% §5739.025|
|Cigarette Tax||1.60 per pack of 20 §§5743.02, 023|
|Gasoline Tax per Gallon||28¢ + variable cents per gallon rate §§5735.25; 5735.05|
|Use Tax||Same rate as sales tax §5741.02|
|Liquor Tax||Beer $.18 per gallon; Wine 32¢ per gal.; 8¢/gal.; Spirits $9.32/gal. §§4301.42, 43; 4305.01|
|Gambling Tax||Horseracing wagers: <$200,000, 1%; $200,000-300,000, 2%; $300,000-400,000, 3%; >$400,000, 4% §3769.08(B)|
Purpose of Consumer Sales Tax
Unlike income taxes, consumer taxes are directed at how a person spends their money rather than how much money they make. As well, consumer taxes in Ohio are a flat percent, not a graduated scale like income tax. This means that everyone pays the same percent, regardless of how much they spend. However, there are different tax percentages depending on the sale or item taxed. In addition to revenue raising, Ohio imposes taxes on certain items to discourage their purchase, and to pay for costs associated with that item.
Types of Consumer Taxes
There are two general forms of consumer taxes in Ohio. The type most people are familiar with is sales tax. Sales tax applies to most consumer sales in the state. However, there are some exceptions. The other form of consumer tax is excise tax. This is a tax on a specific item. The tax can be a flat rate per item, or it can be a percentage of the price, like a sales tax. Excise taxes are used to either discourage purchasing or using an item, or to help pay for expenses that are associated with it.
Sales Tax in Ohio
Ohio charges a 5.75% sales tax for sales within the state. There are many exceptions to sales tax in Ohio, some of the most common exceptions are movie tickets, food purchased at grocery stores, food sold in a student cafeteria, newspapers, some internet sales, and sales by nonprofit organizations. Counties and cities may have their own sales tax on top of the Ohio state sales tax.
The state of Ohio charges $1.25 in tax for ever pack of cigarettes. This tax is meant to discourage smoking, and pay for any costs the state may incur from cigarette smoking.
Ohio charges a $.28 tax for every gallon of gasoline. This is in addition to any federal or local gasoline taxes. The revenue from gasoline taxes generally pays for road repair and maintenance.
For beer, Ohio charges $.18 per gallon. Wine has a $.32 per gallon tax. Hard alcohol is charged $9.32 per gallon in tax.
Ohio charges a tax on horseracing wagers. If the bet is under $200,000, Ohio charges a 1% tax. If the wager is between $200,000 and $300,000 the tax is 2%. Between $300,000 and $400,000, the tax is 3%. If the wager is above $400,000, the tax is 4%.
If you want to avoid paying taxes on an expensive item, like a car, you may try to purchase the car in a state that does not charge sales tax. However, Ohio will charge a use tax at the same rate as a sales tax, once you register the car in Ohio.
Ohio Consumer Tax Law Review at No Cost
If you would like to know more about consumer taxes, there are many attorneys throughout Ohio with tax law experience who may be able to help. In addition to informing you about the law, they may be able to advise you about methods to avoid paying unnecessary taxes, while still staying within the bounds of the law. Get started today with a free legal review of your tax questions from a local attorney.
Contact a qualified attorney.