Updated October 5, 2026. Quick answer: Yes. Ohio taxes a non-grantor trust on its retained income when the trust is a resident trust, which the Revised Code defines as “A trust that, in whole or part, resides in this state.” A trust resides in Ohio to the extent it holds assets transferred on account of the death of a decedent (in the cases the statute describes), or by a person domiciled in Ohio when the person transferred them to an irrevocable trust or when the trust became irrevocable; for the last two a qualifying beneficiary must also be domiciled in Ohio.
How Ohio treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Ohio levies its income tax on every trust residing in or earning or receiving income in the state, and a trust is taxed on its modified Ohio taxable income. |
| Who counts as a resident trust | Ohio ties residency to where the person who funded the trust was domiciled and where the beneficiaries are domiciled, not to the trustee’s address. A trust resides in Ohio to the extent it holds assets transferred on account of the death of a decedent (in the cases the statute describes), by a person domiciled in Ohio when the person transferred them to an irrevocable trust, or by a person domiciled in Ohio when the trust became irrevocable; for the last two, at least one qualifying beneficiary must be domiciled in Ohio during all or some part of the year. The source says: “A trust that, in whole or part, resides in this state.” If only part of a trust resides in Ohio, the trust is a resident only for that part. |
| Rate on trust income | Trusts pay the same rates as estates. For 2025 the Department of Taxation prints 1.31287% on the first $26,050, then $342.00 plus 2.75% up to $100,000, then $2,394.32 plus 3.125% above $100,000. The source says: “levied in the same amount as the tax is imposed on estates”. The rates are the same graduated schedule, with no separate flat trust rate. |
| Distribution deduction | Ohio taxes the trust only on what remains after distributions. The Department says a resident trust must file and pay tax “if it has federal taxable income after distributions”. The documents read do not describe how beneficiaries report the distributed amounts. |
| Nonresident trusts | A nonresident trust that invests only in savings accounts, CDs, publicly traded stocks or bonds, commercial paper or mutual funds owes no Ohio tax. A nonresident trust is taxed only on the part of its modified nonbusiness income that is Ohio-source under section 5747.20, plus its Ohio-apportioned business income. The source says: “It does not owe Ohio income tax”. That statement applies to the investment-only nonresident trusts the page lists. |
| Return to file | A trust files the Ohio IT 1041 when it files federal Form 1041 or 1040NR, has retained earnings, and has income allocable or apportionable to Ohio. The source says: “Earns or receives income allocable or apportionable to Ohio”. Grantor trusts are excluded from Ohio’s definition of a trust for this return. |
A $10,000 example
The tax on $10,000 of taxable income a trust keeps depends on the bracket it lands in. Taxed wholly at the lowest printed rate, 1.31287%, the tax is computed as $10,000 x 1.31287% = $131.29; taxed wholly at the highest, 3.125%, it is computed as $10,000 x 3.125% = $312.50. The state’s own schedule decides which applies. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
For taxable years beginning in 2026, the Revised Code sets trust and estate tax at 1.27448% up to $26,050 and $332.00 plus 2.75% above that amount, ending the 3.125% bracket.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Ohio taxes retirement income, whether Ohio taxes pensions, what a living trust costs in Ohio, trust income tax by state, and federal trust tax brackets.
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Answer againSources
- Ohio Revised Code Section 5747.01, Definitions (Ohio Legislative Service Commission): https://codes.ohio.gov/ohio-revised-code/section-5747.01
- Ohio Revised Code Section 5747.02, Tax rates (Ohio Legislative Service Commission): https://codes.ohio.gov/ohio-revised-code/section-5747.02
- IT 1041 Fiduciary Income Tax Return (Ohio Department of Taxation): https://tax.ohio.gov/business/pass-through-entity-and-fiduciary-income-tax/it-1041
- Pass-Through Entity & Fiduciary Income Tax Rates (Ohio Department of Taxation): https://tax.ohio.gov/business/ohio-business-taxes/pass-through-entities/pte-and-fiduciary-income-tax-rates
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.