Ohio — Sales & Use Tax

## What the Tax Applies To

Ohio imposes an excise tax on each retail sale made in the state. A "sale" includes all transactions for consideration by which title or possession of tangible personal property is transferred, a license to use or consume tangible personal property is granted, lodging is furnished to transient guests by a hotel, or certain enumerated services are provided.

Source: Ohio Rev. Code § 5739.02

Source: Ohio Rev. Code § 5739.01(B)

The statute defines "sale" and "selling" to include transactions by which title or possession of tangible personal property is transferred, licenses to use or consume tangible personal property are granted, lodging furnished to transient guests, and the provision of certain services such as repair, installation, production, automatic data processing, telecommunications, personal care services, and others enumerated in § 5739.01(B)(3).

Source: Ohio Rev. Code § 5739.01(B)

## Statewide Base Rate

The statewide sales tax base rate is 5.75%. Counties and transit authorities may levy additional local sales taxes; combined state and local rates ranged from 6.50% to 8.00% as of October 2025.

Source: Ohio Rev. Code § 5739.02

Source: Ohio Dept. of Taxation, Sales and Use Tax Rate Map (Oct. 2025)

## Who Must Collect the Tax

Except as otherwise provided, the tax must be paid by the consumer to the vendor, and each vendor must collect from the consumer the full and exact amount of the tax payable on each taxable sale. Vendors act as trustees for the state of Ohio in collecting the tax.

Source: Ohio Rev. Code § 5739.03(A)

Persons making retail sales must obtain a vendor's license before engaging in business. Registration is completed through the Ohio Business Gateway.

Source: Ohio Rev. Code § 5739.17

## Presumption of Taxability

All sales are presumed to be taxable until the contrary is established. When a sale is claimed to be exempt, the consumer must provide the vendor with a certificate specifying the reason the sale is not legally subject to tax, except for certain enumerated exemptions.

Source: Ohio Admin. Code § 5703-9-14(B)(16)

Source: Ohio Rev. Code § 5739.03(B)

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Ohio presumes that a remote seller has substantial nexus with the state — and must register to collect and remit use tax — when the seller has gross receipts exceeding $100,000 or engages in 200 or more separate transactions from sales of tangible personal property or services delivered into Ohio in the current or preceding calendar year. Either threshold triggers the collection obligation.

The gross receipts threshold includes all retail sales to Ohio consumers, whether taxable or exempt. Wholesale transactions (sales for resale) are excluded from the calculation. Marketplace sales facilitated through a third-party platform are included in the seller's threshold calculation even if the marketplace facilitator collects the tax.

The statute defines "substantial nexus with this state" as sufficient contact to satisfy the Commerce Clause of the U.S. Constitution. A seller that exceeds either threshold is presumed to have substantial nexus, though the presumption is rebuttable if the seller can demonstrate its activities are not significantly associated with its ability to establish or maintain a market in Ohio.

These economic nexus rules became effective August 1, 2019, following the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc. Prior click-through nexus and network nexus provisions were repealed and replaced with this economic standard.

Source: Ohio Rev. Code § 5741.01(I)(2)(g), (h)

A marketplace facilitator with substantial nexus — gross receipts exceeding $100,000 or 200 or more separate transactions from sales into Ohio in the current or preceding calendar year — is treated as the seller and must register and collect use tax on all sales it facilitates on behalf of marketplace sellers. The collection obligation begins on the first day of the first month that starts at least thirty days after the facilitator first meets either threshold. Marketplace facilitators meeting the thresholds before August 1, 2019 were required to begin collecting by September 1, 2019.

Source: Ohio Rev. Code § 5741.01(E), (I)(2)(g), (h)

Source: Ohio Rev. Code § 5741.07

Vendors and sellers licensed under Ohio law are required to file returns and remit tax monthly unless the tax commissioner authorizes less frequent filing. Vendors and sellers that do not hold a permit to sell alcoholic beverages may be authorized to file semiannually if their average monthly tax liability is less than $200.

Holders of direct pay permits and business consumers filing use tax returns may be authorized to file quarterly if their average monthly tax liability is less than $5,000.

Returns are due on or before the 23rd day of each month for the preceding month's activity. The statute requires that returns be filed electronically and that payments be made electronically in a manner approved by the commissioner.

Source: Ohio Rev. Code § 5739.12(A)(1)

Source: Ohio Admin. Code § 5703-9-13

Sales for resale are excluded from the definition of "retail sale" under Ohio law. A sale is not a retail sale when the purchaser's purpose is to resell the thing transferred or benefit of the service provided in the same form as received. To claim this exclusion, the purchaser must provide the vendor with a fully completed exemption certificate. The certificate may be provided electronically or in hard copy, and the vendor must retain it in its files. Certificate forms are available on the Ohio Department of Taxation website, and substitute certificates may be used if they contain all required data elements prescribed by regulation.

Source: Ohio Rev. Code § 5739.01(E)

Source: Ohio Rev. Code § 5739.03(B)

Source: Ohio Admin. Code § 5703-9-03

Ohio exempts from sales and use tax tangible personal property and services transferred to a manufacturer when the purchaser's purpose is to use the thing transferred primarily in a manufacturing operation to produce tangible personal property for sale. The exemption is codified in Ohio Rev. Code § 5739.02(B)(42)(g) and detailed in Ohio Rev. Code § 5739.011 and Ohio Admin. Code § 5703-9-21. This is one of the broadest and most economically significant exemptions in Ohio.

## Who Qualifies as a Manufacturer

A "manufacturer" is a person engaged in manufacturing, processing, assembling, or refining a product for sale. A "manufacturing operation" is a process in which materials are changed, converted, or transformed into a different state or form from which they previously existed; it includes refining materials, assembling parts, and preparing food for human consumption. The exemption applies only when the manufacturer is producing tangible personal property for sale — items manufactured solely for the manufacturer's own use or consumption are not eligible.

## Scope of the Exemption — What Is Included

The exemption is not limited to production machinery. Ohio Rev. Code § 5739.011(B) lists a non-exclusive set of exempt "things transferred," including:

• Production machinery and equipment that act upon the product or treat the materials or parts in preparation for the manufacturing operation;
• Materials handling equipment that moves the product through a continuous manufacturing operation, equipment that temporarily stores the product during the manufacturing operation, or (excluding motor vehicles licensed to operate on public highways) equipment used in intraplant or interplant transfers of work in process where the facilities are operated by the same person;
• Catalysts, solvents, water, acids, oil, and similar consumables that interact with the product and are an integral part of the manufacturing operation;
• Machinery, equipment, and other tangible personal property used during the manufacturing operation that control, physically support, produce power for, lubricate, or are otherwise necessary for the functioning of production machinery and equipment and the continuation of the manufacturing operation;
• Machinery, equipment, fuel, power, material, parts, and other tangible personal property used to manufacture machinery, equipment, or other tangible personal property used in manufacturing a product for sale;
• Machinery, equipment, and other tangible personal property used by a manufacturer to test raw materials, the product being manufactured, or the completed product;
• Machinery and equipment used to handle or temporarily store scrap that is intended to be reused in the manufacturing operation at the same manufacturing facility;
• Coke, gas, water, steam, and similar substances used in the manufacturing operation; machinery and equipment used for, and fuel consumed in, producing or extracting those substances; machinery, equipment, and other tangible personal property used to treat, filter, pump, or otherwise make the substance suitable for use in the manufacturing operation; and machinery and equipment used for, and fuel consumed in, producing electricity for use in the manufacturing operation; and
• Repair or replacement parts and installation or repair services for exempt machinery and equipment.

## What Is Excluded

Ohio Rev. Code § 5739.011(C) and Ohio Admin. Code § 5703-9-21(D) list items that do not qualify, even if used by a manufacturer:

• Tangible personal property used in administrative, personnel, security, inventory control, record-keeping, ordering, billing, or similar functions;
• Tangible personal property used in storing raw materials or parts prior to the commencement of the manufacturing operation or used to handle or store a completed product, including storage that actively maintains a completed product in a marketable state or form;
• Tangible personal property used to handle or store scrap or waste intended for disposal, sale, or other disposition (other than reuse in the manufacturing operation at the same manufacturing facility);
• Tangible personal property that is or is to be incorporated into realty;
• Machinery, equipment, and other tangible personal property used for ventilation, dust or gas collection, humidity or temperature regulation, or similar environmental control, unless the environmental control is necessary for a continuous manufacturing operation (some ventilation and exhaust equipment is taxable — see Ohio Admin. Code § 5703-9-21 examples);
• Equipment used to produce or distribute steam, compressed air, or chilled water for heating or cooling a building or other comfort uses (as opposed to use directly in the manufacturing process);
• Tangible personal property to be incorporated into, fabricated for, or attached to real property of any person;
• Machinery, equipment, and other tangible personal property used to clean, repair, or maintain real or personal property in the manufacturing facility (tools, equipment, and supplies for maintenance, installation, repair, or cleaning are taxable; however, this exclusion does not apply to repair or replacement parts for exempt equipment, which are themselves exempt based on the taxability of the equipment into which they are installed); and
• Motor vehicles registered for operation on the public highways.

## When the Manufacturing Operation Begins and Ends

The exemption applies to property used in "a manufacturing operation," which is a defined temporal scope. The manufacturing operation begins when raw materials or parts are "committed" to the manufacturing process — the point at which materials handling from initial storage has ceased or the point where the materials or parts have been mixed, measured, blended, heated, cleaned, or otherwise treated or prepared for the manufacturing process, whichever first occurs. Initial storage of raw materials and movement prior to commitment are not part of the manufacturing operation.

The manufacturing operation ends when the product is "completed." A "completed product" means a manufactured item that is in the form and condition as it will be sold by the manufacturer. Materials handling of a completed product to or from storage, to or from packaging, or to the place from which the completed product will be shipped is not a part of the continuous manufacturing operation.

## Primary-Use Rule

If a machine is used by a manufacturer in both a taxable and an exempt manner, it is totally taxable or totally exempt based upon its quantified primary use. If the thing transferred consists of fungibles (e.g., electricity, natural gas), they are taxed based upon the proportion of the fungibles used in a taxable manner.

## Documentation — Exemption Certificates

To claim the manufacturing exemption, a purchaser must provide the vendor with a fully completed exemption certificate. Manufacturers typically use Ohio Form STEC B (Sales and Use Tax Blanket Exemption Certificate), which is a blanket certificate covering all qualifying purchases from a vendor. The certificate must state a valid reason for claiming the exemption — for example, "tangible personal property used or consumed in a manufacturing operation" — and must identify the specific statutory provision (Ohio Rev. Code § 5739.02(B)(42)(g) and § 5739.011). Certificates may be provided electronically or in hard copy, and vendors must retain them in their files.

Source: Ohio Rev. Code § 5739.02(B)(42)(g)

Source: Ohio Rev. Code § 5739.011

Source: Ohio Admin. Code § 5703-9-21

Source: Ohio Form STEC B (Rev. 7/25)