Ohio Tax Update – Governor John Kasich signs new biennial budget bill (Fiscal year 2018 -2019)
By Paul E. Valencic, CPA
On June 30, 2017, Ohio Governor John Kasich signed into law Ohio’s biennial budget bill, House Bill 49, which made several changes to the existing Ohio income tax code.
Individual income tax
Two individual income tax brackets eliminated
- For tax years beginning in 2017, the existing lower two individual income tax brackets, which relate to individuals’ nonbusiness income, have been repealed. Under the new law, the lowest tax bracket will start with $10,500 of Ohio taxable income. As a result of this change, the low-income taxpayer credit (individuals with Ohio adjusted gross income of $10,000 or less) will also be repealed.
Increase deduction for Ohio 529 plans
- For tax years beginning on or after January 1, 2018, the maximum deduction for contributions made to Ohio 529 plans increases to $4,000 (from $2,000) annually for each beneficiary.
Changes to municipal income taxes
Election for State administration of municipal business income taxes
- For tax years beginning in 2018, business will have the option of electing to have the State administer their municipal income tax filing, rather than filing with each municipality. This option will permit businesses to file one form and make one payment to municipalities through the Ohio Business Gateway.
Elimination of the Ohio municipal throw-back rule.
- For Ohio municipal income tax apportionment purposes, the sales factor will no longer be subject to the throw-back rule for tax years beginning on or after January 1, 2018. The throw-back rule was a provision which required taxpayers to include in their sales factor receipts shipped outside its boundary if its employees were not regularly engaged in the solicitation and promotion of sales at the place where delivery was made.
Estimated tax payment due date
- Beginning in 2018, the fourth quarter individual estimated tax due date will be extended one month to January 15th (from December 15th).
Tax amnesty program
- House Bill 49 authorizes a tax amnesty program scheduled to commence January 1, 2018, and run through February 15, 2018. Eligible taxpayers that pay qualifying delinquent taxes will receive full penalty abatement, and will only be required to pay one-half of the interest otherwise due. Qualifying delinquent taxes are those that were due and payable as of May 1, 2017, which were either unreported or underreported, and remain unpaid. Future correspondence relating to the tax amnesty program is expected to be issued by the Tax Commissioner.
Note: the tax amnesty program is not available for taxes which assessments have been issued, a notice of audit has been issued, an audit that either has been or is currently being conducted, or on taxes which relate to periods ending after the effective date of this section. House Bill 49 also makes several changes to other Ohio taxes, tax credits and incentives, and other administrative items.
Please contact Paul E. Valencic (216) 344-5229 or your Maloney + Novotny LLC representative with any questions about these or any other Ohio Tax laws or issues. You may also use this online contact form and someone from our firm will get back to you promptly.