Ohio Severance — § 4141.31 UI Offset, 2.75% Flat Tax + Local, 2026

Ohio WARN: what applies#

Ohio has no state mini-WARN statute. The operative layoff-notice regime for private Ohio employers is federal WARN (29 U.S.C. §§ 2101–2109): employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50 or more affected at a single site of employment that constitutes at least 33% of the active workforce, or 500 or more regardless of percentage) or a plant closing. Notice must go to affected employees (or their representatives), the state dislocated-worker unit (the Ohio Department of Job and Family Services Rapid Response team), and the chief elected official of the local government. Liability for non-compliance is back pay and benefits for each day notice was not given, up to 60 days, plus a civil penalty of up to $500 per day payable to the local government. Ohio adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

How severance is taxed in Ohio#

Ohio adopted a flat 2.75% individual income tax for tax year 2026 under Amended Substitute House Bill 96 (signed by Governor DeWine on June 30, 2025), the FY 2026–2027 biennial budget — a sharp simplification from prior years. For 2025 there were still two brackets (2.75% up to $100,000 and 3.125% above $100,000, itself reduced from 3.5% under HB 96); for 2026 the structure becomes a single 2.75% rate applied to all nonbusiness income above $26,050, with income at or below $26,050 taxed at 0%. The Ohio Department of Taxation has confirmed that effective January 1, 2026 the supplemental withholding rate on bonuses and other supplemental wages (including severance) decreased from 3.5% to 2.75%, matching the flat individual rate. CRITICALLY, Ohio is unusual among states in the breadth of its MUNICIPAL income tax system — more than 700 Ohio municipalities (cities and villages) levy their own income tax under Ohio Rev. Code Chapter 718, with rates from about 0.5% to 3%: Columbus 2.5%, Cleveland 2.5%, Akron 2.5%, Toledo 2.25%, Dayton 2.25%, Cincinnati 1.8%. Ohio's municipal income tax is generally a WORKPLACE tax — you owe the city in which you physically performed the work — though most municipalities with rates of 2% or higher provide a 100% credit against your resident-city tax for income tax paid to another work-city, so the COMBINED effective municipal rate is typically capped at the higher of the two rates rather than additive. About 200 Ohio school districts also levy their own income tax (0.25%–2%) on resident school-district taxable income. Severance paid to an Ohio employee is therefore typically subject to (a) the 2.75% state supplemental withholding rate, (b) any applicable municipal income tax in the city where the work was performed when earned, and (c) any applicable school-district income tax for the recipient's resident school district. On top of Ohio state and local withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% up to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Ohio has no state disability insurance, no statewide paid family leave premium, and no statewide transit tax on employees. Confirm the live Ohio Department of Taxation withholding tables at tax.ohio.gov and your specific work-city / resident-city rates at thefinder.tax.ohio.gov before relying on the figures above.

Calculate your situation#

Inputs default to Ohio; adjust to your specifics.

FAQ#

Does Ohio require severance pay?

No Ohio statute requires private employers to pay severance. Ohio is a strong at-will employment state — the employment relationship is terminable by either party at any time, with or without cause, unless modified by an express written contract, an enforceable handbook promise, or a collective bargaining agreement. Ohio has no mini-WARN that would mandate pay-in-lieu of notice. The only layoff-notice regime that carries teeth in Ohio is federal WARN (29 U.S.C. §§ 2101–2109), which requires 60 days advance notice (or back pay for missed days) at employers of 100+ for covered mass layoffs and plant closings — but WARN mandates notice, not severance. Ohio is also a non–right-to-work state (Ohio voters rejected SB 5 in 2011, leaving private-sector union-security clauses lawful), though that does not affect severance entitlement. Separately, Ohio Rev. Code § 4113.15 (Ohio's wage-payment statute) requires that wages earned during the first half of a month be paid by the first day of the next month and wages earned during the second half by the fifteenth day of the next month; severance itself is generally not "wages" under § 4113.15 unless your contract, written policy, or established plan promises it. Severance is therefore employer-discretionary in Ohio unless your employment agreement, handbook, or collective bargaining agreement makes it mandatory.

How is severance taxed in Ohio? (State + city + school district)

Ohio has a flat 2.75% individual income tax for tax year 2026 under Amended Substitute House Bill 96, signed by Governor DeWine on June 30, 2025 — applied to all nonbusiness income above $26,050, with income at or below $26,050 taxed at 0%. This is a sharp simplification from prior years (2025 had two brackets, 2.75% up to $100,000 and 3.125% above; pre-HB 96 the top rate was 3.5%). The Ohio Department of Taxation has confirmed that the supplemental withholding rate on bonuses and other supplemental wages — including severance — also dropped to 2.75% effective January 1, 2026 (from 3.5% in 2025), bringing it in line with the flat individual rate. The MAJOR caveat unique to Ohio is the MUNICIPAL income tax system: more than 700 Ohio cities and villages levy their own income tax under Ohio Rev. Code Chapter 718, at rates from roughly 0.5% to 3%. The big-city rates for 2026 are Columbus 2.5%, Cleveland 2.5%, Akron 2.5%, Toledo 2.25%, Dayton 2.25%, and Cincinnati 1.8%. Ohio's municipal tax is generally a WORKPLACE tax — owed to the city where you physically performed the work — though most cities with rates of 2% or more provide a 100% credit against your RESIDENT city tax for municipal tax paid to a different work city, so the combined municipal burden is typically capped at the higher of the two rates rather than additive. About 200 Ohio school districts ALSO levy school-district income tax (0.25%–2%) on resident school-district taxable income, but a non-resident is not subject to a school-district tax. Net result: a Columbus-resident, Columbus-worker earning severance is subject to 2.75% state + 2.5% municipal = about 5.25% in Ohio state-and-local withholding, before federal 22% supplemental and FICA. Confirm your specific work-city / resident-city / school-district at thefinder.tax.ohio.gov and the live ODT employer withholding tables at tax.ohio.gov before relying on net-of-tax figures.

Does Ohio have a mini-WARN?

No. Unlike California, New York, New Jersey, or Illinois, Ohio has no state-law mini-WARN. The operative regime is federal WARN (29 U.S.C. §§ 2101–2109): employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50+ affected at a single site of employment constituting at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Notice must go to affected employees, the Ohio Department of Job and Family Services (ODJFS) Rapid Response unit, and the chief elected local official. Failure to comply triggers back pay and benefits for the period notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Ohio adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

Can I collect Ohio unemployment while receiving severance? (Ohio Rev. Code § 4141.31)

Severance reduces Ohio unemployment benefits during the period it covers, BUT it does not permanently disqualify you — once the severance is exhausted (under the statute's allocation rule), UI eligibility resumes (subject to other qualifying requirements). This is THE distinctive Ohio severance issue. Three statutory provisions control. (1) Ohio Rev. Code § 4141.31(A) — "Benefits reduced by remuneration" — provides that "benefits otherwise payable for any week shall be reduced by" remuneration paid in the form of separation, dismissal, or termination pay, as well as remuneration in lieu of notice. (2) The allocation rule under § 4141.31 has two layers: if the EMPLOYER designates the period to which the payment is allocated, the payment is allocated to those weeks; if the employer does NOT designate a period, the statute defaults to attributing an amount equal to the claimant's NORMAL WEEKLY WAGE to the first and each succeeding week following separation until the lump sum is exhausted. The practical effect: a $40,000 lump-sum severance paid to a claimant with a normal weekly wage of $1,000 is generally allocated to the next 40 weeks at $1,000/week, reducing the ODJFS weekly benefit amount dollar-for-dollar (typically to zero) during the allocated weeks. (3) Ohio Rev. Code § 4141.29 separately defines remuneration in lieu of notice, vacation pay, holiday pay, and dismissal/severance pay as remuneration for purposes of qualifying weeks when paid with respect to weeks in the base period. There is a narrow exception in § 4141.31 for military severance, disability, or separation pay paid to a former member of the armed forces of the United States. PRACTICAL TAKEAWAYS for Ohio severance recipients: (a) you generally CAN file for ODJFS UI immediately after separation — filing protects your benefit year and lets ODJFS make the allocation determination; (b) you should fully disclose the severance amount, allocation period, and any employer designation when you file at unemployment.ohio.gov and on weekly certifications — failure to report severance is fraud; (c) lump-sum severance does NOT permanently disqualify you — it delays benefits until the lump sum is allocated through; (d) if your employer is willing to allocate severance to a specific finite period (rather than letting the statute default the entire amount across multiple weeks at normal weekly wage), the math is the same but the paperwork is cleaner; (e) the ODJFS deputy issues a written determination after gathering information from you and the employer. Confirm the live 2026 ODJFS maximum weekly benefit amount at unemployment.ohio.gov (typically in the low-$600 range without dependents, higher with dependent allowances).

Are non-competes enforceable in Ohio after a layoff? (Raimonde v. Van Vlerah)

Often yes if reasonable — Ohio has NO non-compete statute, and Ohio non-compete law is built almost entirely on the Ohio Supreme Court's 1975 decision in Raimonde v. Van Vlerah, 42 Ohio St.2d 21, 325 N.E.2d 544 (1975). Five doctrinal points control. (1) No statute: there is no Ohio Revised Code chapter restricting employer use of non-competes for ordinary workers — Ohio is one of a shrinking minority of states without statutory non-compete protections for low-wage, hourly, or FLSA-overtime-eligible workers (compare Virginia's Va. Code § 40.1-28.7:8, California's near-total ban, or the FTC's vacated 2024 rule). (2) The Raimonde reasonableness test: a covenant is enforceable only to the extent it (a) is no greater than is required for protection of the employer's legitimate business interest, (b) does not impose undue hardship on the employee, and (c) is not injurious to the public. The Raimonde opinion lists nine non-exclusive factors Ohio courts weigh — including whether the covenant is geographically limited, the time and territory restrictions, whether it seeks to bar the employee from his sole means of support, whether the employer's legitimate interest is at stake, whether the restraint is greater than necessary, the disparity in bargaining power, and whether enforcement would harm the public. (3) Legitimate business interest: Ohio courts will protect trade secrets, confidential information, substantial customer relationships, goodwill, and (in some cases) specialized training the employer provided. (4) Judicial modification (red-pencil rewrite): unlike strict blue-pencil states, Ohio courts under Raimonde have broad discretion to MODIFY an overbroad covenant — narrowing duration, geography, or scope of restricted activities — to make it enforceable. Note: a 2024 Ohio Court of Appeals decision (highlighted by Epstein Becker Green) declined to modify a covenant the court found was drafted in bad faith, signaling that modification is discretionary, not automatic. (5) Layoff context: the post-employment context generally weighs IN FAVOR of the employee on factors (b) and (c) — courts are more skeptical of enforcement against an involuntarily separated employee than against one who quit to compete. Practical takeaway: in Ohio, the "non-compete release" clause in your severance offer often has real value (Ohio does not have Virginia's statutory bar for ordinary workers), and a covenant that is reasonable in time, geography, and scope can be enforced — but Ohio courts will pare back overbroad terms rather than strike the covenant entirely. Have an attorney review duration, geography, scope of restricted activity, and the post-layoff context before signing.

What other Ohio laws affect a severance package?

Three are worth knowing about. (1) Ohio Rev. Code § 4113.15 (Ohio's wage-payment statute) requires that wages earned during the first half of a calendar month be paid by the first day of the next month and wages earned during the second half by the fifteenth day of the next month; an employer who fails to pay earned wages within 30 days of the next regular payday owes the employee liquidated damages of 6% of the unpaid amount or $200, whichever is greater, in addition to the wages. Severance itself is not "wages" under § 4113.15 unless your contract, established policy, or plan makes it so — but earned commissions, bonuses, and accrued vacation that the policy pays out at separation are recoverable under the statute. (2) The Ohio Civil Rights Act (Ohio Rev. Code Chapter 4112) prohibits employment discrimination on the basis of race, color, religion, sex (including pregnancy), military status, national origin, disability, age (40+), or ancestry, and applies to employers with four or more employees — a lower threshold than federal Title VII's 15-employee minimum, so Chapter 4112 reaches smaller Ohio employers. The Employment Law Uniformity Act of 2021 (HB 352, effective April 2021) significantly reformed Chapter 4112 — including shortening the statute of limitations for most employment-discrimination claims to two years, requiring administrative exhaustion through the Ohio Civil Rights Commission, and aligning supervisor liability with federal Title VII. A general release in your severance agreement giving up Chapter 4112 claims is generally enforceable if knowing and voluntary. (3) OWBPA is federal and applies in Ohio: if you are 40 or older and asked to waive age-discrimination claims under the ADEA, you get 21 days to consider the agreement (45 days for group exits) and 7 days after signing to revoke. Ohio is a non–right-to-work state (Ohio voters rejected SB 5 in November 2011), so private-sector union-security clauses remain lawful — though that does not directly affect severance entitlements.