Most of what changes for a tradesperson in Ohio is set by the state, not Washington: how you get paid, whether you need to register, and what you owe in tax. Here is what actually differs, and where to run your own numbers.
Each section below points to a tool that runs your exact numbers for Ohio.
Tax in Ohio
Ohio has a graduated state income tax that runs up to 2.75% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both Ohio and the IRS through the year.
On sales tax, Ohio follows the usual rule for the trades: your labor is not taxed, and you pay sales tax on your materials when you buy them rather than charging it to the customer. Some enumerated services taxable.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Ohio.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a Ohio contractor paid, and in Ohio you generally have to record it within 60 days of your own last day of work or furnishing materials. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 6 years from filing the affidavit (1311.13(C)) - but almost anyone can cut that to 60 days. Under 1311.11 the owner, part owner, lessee, MORTGAGEE, any other person with an interest, or a contractor or subcontractor who has posted a bond may serve a notice to commence suit. From completion of service you have 60 days, and if you miss it the lien is void and the property wholly discharged. Your debt survives; your security does not. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (O.R.C. 1311.04, 1311.05, 1311.06, 1311.07, 1311.11, 1311.13).
On money held back as retainage, here is where Ohio lands:
- Private work: No statutory cap on private work in Ohio. Whatever your contract says governs, so read the withholding clause.
- Public work: 4% of each progress-payment estimate for labor performed, prepared by the contractor and approved by the architect or engineer. 8% of the invoice cost of material delivered to the site, capped at the bid price on a unit-price contract.
- Release: Private: 10 days from receipt of the retainage from the owner. Public: 30 days (the statute does not say whether these are calendar or business days) from substantial completion of, occupation of, use of, or acceptance of the project, whichever occurs.
- Prompt pay: A private prime who is late passing retainage down owes 18% a year from the eleventh day after he received it, and that right cannot be waived by agreement. Public late payment carries the average prime rate at commercial banks in the nearest city over 100,000; a missed escrow deposit carries 8% compounded daily.
Heads up: A further amendment to §153.12 is already enacted under SB 262 and commences 17 September 2026; its text was not retrieved, so the 4% figure above should be re-checked after that date. Transportation work is carved out of both §153.12 and §153.14 and no percentage for it was found in Chapter 5525.
Check the Retainage Calculator before you sign a contract that holds back more.
Free Ohio retainage letters
Three letters written for Ohio's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.
- Retainage Release Request (Ohio), for when the job is done and the money has not come back
- Retainage Overdue: Demand for Payment (Ohio), for when the release date has passed and nothing has arrived
- Retainage Held Above the Cap: Challenge Letter (Ohio), for when more is being held than the state appears to permit
Do you need a license in Ohio?
Ohio has no statewide general contractor license, so for most building work there is no state license to get. That is one of the things that makes Ohio straightforward to start in. It does not mean no rules at all: the state still licenses specific trades like electrical and plumbing, and your city or county can require its own registration or permits, so always check locally before you take a job on.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
Ohio adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2018 (published as the 2019 Residential Code of Ohio) / 2021 IBC for commercial (published as the 2024 Ohio Building Code)
- Electrical: 2023 for both, but adopted twice: commercial from 1 March 2024 and one- and two-family dwellings from 15 April 2024
- Energy: 2018 for dwellings, in chapter 11 of the residential code since July 2019 / 2021 with ASHRAE 90.1-2019 for commercial since March 2024
- Plumbing: 2021 IPC (published as the 2024 Ohio Plumbing Code), applied to dwellings through the residential code rather than directly
Ohio does not run one edition across the whole job, and the electrical code is where it splits: 2023 for both, but adopted twice: commercial from 1 March 2024 and one- and two-family dwellings from 15 April 2024. That matters more than the number itself. If you work on houses, the residential edition is your book, and the single figure quoted in most adoption charts is the commercial one.
Ohio runs two parallel tracks, one for one- and two-family dwellings through the Residential Code of Ohio and one for everything else through the Ohio Building Code, and both are adopted by the same board through separate rulemaking. That is why the same 2023 NEC bound commercial work five and a half weeks before it bound houses. The energy gap is wider and still open: a house is on the 2018 IECC while a commercial job is on the 2021 with ASHRAE 90.1-2019. Every code carries an Ohio edition year ahead of the model code underneath, so build to the Ohio designation. A local authority may add requirements that do not conflict, but a conflicting local rule is invalid unless the board itself adopts it, and where there is no certified local department the state enforces directly.
Source: Ohio Administrative Code chapter 4101:8 and the Residential Code of Ohio, adopted by the Board of Building Standards under ORC chapters 3781 and 3791, with the local-conflict procedure at ORC §3781.10. Read against that source on 2026-08-25.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in Ohio is $11.00 an hour. Employers with annual gross receipts under $405,000 must pay not less than $7.25. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
On workers' comp, Ohio is a monopolistic state: buy workers' comp directly from the Ohio Bureau of Workers' Compensation. Private carriers can't write it here. Construction runs roughly $3 to $15 per $100 of payroll by class. Get a range on the Workers' Comp Estimator.
If a client will not pay
If a client will not pay, you can sue for up to $6,000 in Ohio's Small Claims Division (Municipal/County Court). That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 6 years to sue you over the work under a written contract in Ohio, with an absolute cutoff 10 years after the job is substantially complete. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in Ohio?
Ohio has a graduated rate up to 2.75% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in Ohio?
For most general building work, no. Ohio has no statewide general contractor license. The state still licenses specific trades and your city or county may require its own registration, so check both.
What is the small claims limit in Ohio?
You can sue for up to $6,000 in Ohio's Small Claims Division (Municipal/County Court). The filing fee is typically $50 to $75. Larger claims go to regular civil court.
Where do I buy workers' comp in Ohio?
Ohio is a monopolistic state, so you buy workers' comp directly from Ohio BWC. Private carriers cannot write it here.
How long do I have to file a mechanic's lien in Ohio?
Generally 60 days from your own last day of work or furnishing materials. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
How much retainage can be held back in Ohio?
Public: 4% of each progress-payment estimate for labor performed, prepared by the contractor and approved by the architect or engineer. Public, stored materials: 8% of the invoice cost of material delivered to the site, capped at the bid price on a unit-price contract. Run your own figure on the Retainage Calculator.
Are there free Ohio contract and payment forms?
Yes. This page links 3 retainage letters written to Ohio's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.
The honest bit
These are the 2026 rules for Ohio as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Ohio tax and licensing agencies, and your local building department) or with a professional. Where Ohio does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Sources
- Ohio statutes (codes.ohio.gov) · Mechanics lien notice, filing and enforcement deadlines in Ohio: O.R.C. 1311.04, 1311.05, 1311.06, 1311.07, 1311.11, 1311.13. Verified against this authority on 2026-08-15.
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