Ohio does not tax most pension income, but the rules depend on when you were born and what kind of pension you receive

If you receive a pension from your former employer or the military, Ohio will not tax it as income. This is one of the most generous pension tax treatments in the country. However, if you also receive income from other sources — such as Social Security, 401(k) withdrawals, or part-time work — those are taxed normally. The key is understanding which income Ohio leaves alone and which it does not.

The pension exemption applies to pensions from any source: private employers, government agencies, the military, or out-of-state employers. As long as the money comes from a pension plan, not from a job you are still working, Ohio will not take a state income tax cut from it. This means your full pension payment reaches your bank account without a state withholding.

Key Takeaways

  • Ohio exempts all pension income from state income tax, regardless of the amount or the source of the pension.
  • The exemption covers military pensions, government employee pensions, and private employer pensions equally.
  • Other retirement income such as 401(k) withdrawals, IRA distributions, and Social Security are taxed under different Ohio rules.
  • You do not need to file a special form to claim the pension exemption — you report it on your Ohio tax return and it is automatically excluded.

What counts as pension income in Ohio

Pension income means money you receive from a retirement plan after you leave a job. It includes monthly payments from a defined-benefit pension plan (the kind that pays you a set amount each month for life) and lump-sum distributions from those plans if you take them as an annuity. It also includes payments from a military retirement system, a government employee retirement system, or a private company pension.

The income must come from a plan that was set up by an employer or union specifically to provide retirement benefits. If you worked for the state of Ohio, a city, a county, a school district, or the federal government, your pension is covered. If you worked for a private company and received a pension when you retired, that is covered too. The source does not matter — only that it is a pension.

What Ohio taxes instead: 401(k)s, IRAs, and other retirement accounts

Ohio taxes withdrawals from 401(k) plans, 403(b) plans, traditional IRAs, and similar accounts as ordinary income. These are not pensions, even though they are retirement savings. If you are retired and taking distributions from a 401(k) or IRA, Ohio will tax that money at your state income tax rate, which ranges from 0% to 5.75% depending on your income level.

Social Security benefits are also taxed by Ohio under a separate rule. If your total income (including half of your Social Security) exceeds certain thresholds, a portion of your Social Security becomes taxable. For 2024, those thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. Many retirees fall below these thresholds and owe no Ohio tax on Social Security.

If you work part-time or have other earned income in retirement, that is taxed normally. The pension exemption does not extend to wages, self-employment income, or investment income such as interest or dividends.

How to report pension income on your Ohio return

You report pension income on the Ohio IT 1040 form (the state income tax return for individuals) on Line 7, labeled "Pensions and Annuities." You will receive a 1099-R form from your pension provider showing the total amount paid to you during the year. Enter that amount on Line 7.

Then, on Line 8, you enter the amount that is exempt from Ohio tax. For most people, this is the same as the amount on Line 7 — the entire pension is exempt. You subtract Line 8 from Line 7, which leaves zero taxable pension income. This is not a deduction you have to claim; it is a direct exemption built into the form.

If you have other types of retirement income (such as a 401(k) withdrawal) in addition to your pension, those go on different lines and are taxed normally. The pension exemption applies only to pension income, not to other retirement account distributions.

Pensions from out-of-state employers and the military

If you worked for an employer outside Ohio and received a pension, that pension is still exempt from Ohio tax. The exemption does not depend on where the employer was located or where you worked. Military pensions are also fully exempt, whether you served on active duty or in the reserves.

If you moved to Ohio after retiring and are now receiving a pension from a job you held in another state, bring your 1099-R form with you. You will report it the same way on your Ohio return, and the exemption applies automatically. You do not need to prove where you worked or file any special documentation.

When you move out of Ohio

If you move out of Ohio while receiving a pension, you will no longer owe Ohio state income tax on that pension. However, you may owe income tax to your new state. Some states tax pensions, and some do not. You will need to file a tax return in your new state and follow that state's rules for pension taxation.

If you move back to Ohio later, the exemption applies again. There is no time limit on the exemption — it applies as long as you are an Ohio resident receiving pension income.

Frequently Asked Questions

Do I have to file an Ohio tax return if I only have pension income?

No. If your only income is a pension and it is below the filing threshold (which varies by age and filing status), you do not have to file. However, if you have other income sources or if you want to claim a refund of taxes withheld, you should file even if you are not required to.

Will my pension be taxed by the federal government?

Yes. The federal government taxes pension income as ordinary income. The Ohio exemption applies only to state income tax, not federal tax. You will owe federal tax on your pension unless you fall below the federal filing threshold.

What if I take a lump-sum distribution from my pension instead of monthly payments?

If you take a lump sum and roll it into an IRA or another may have access to retirement plan, the amount rolled over is not taxed. If you take the lump sum as cash, it is treated as pension income and is exempt from Ohio tax, but you will owe federal tax on it.

Does the pension exemption explore if I am still working?

Yes. You can receive a pension and work at the same time, and the pension is still exempt from Ohio tax. Your wages from the job are taxed normally, but the pension portion is not.

What if my pension is from a union or a multi-employer plan?

The exemption applies to union pensions and multi-employer pensions the same way it applies to single-employer pensions. As long as the income comes from a pension plan, Ohio does not tax it.