Ohio Tax Update

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By: Paul E. Valencic, CPA – Maloney+Novotny, LLC
pvalencic@maloneynovotny.com

Individuals and business affected by new Ohio tax update

Paul Valencic, CPA - Maloney+Novotny, LLC
Paul Valencic, CPA Maloney+Novotny, LLC

As part of Ohio’s biennial budget, the Ohio House of Representatives passed a bill on May 9, 2019, that contains several provisions which may affect individual and business taxpayers. This Ohio tax update bill has been forwarded to the Ohio Senate for their review. From there it will be forwarded onto the Governor for his signature, with a deadline of June 30, 2019.

The Ohio tax update bill (Sub. House Bill 166) contains the following tax changes:

  • Ohio Business Income Deduction – lowering the current $250,000 pass-through entity deduction to $100,000. Currently, business owners are able to deduct the first $250,000 of business income from their federal adjusted gross income.
  • Business Income Tax Rate – eliminating the flat 3% tax rate. Currently, business owner’s taxable “business income” is taxed at a flat 3% rate.
  • Personal Income Tax Rates – an overall 6.6% reduction of personal income tax rates. Also, the bottom two brackets will be eliminated, taking the personal income tax brackets from seven to five, eliminating any tax for Ohio taxable income under $22,250.
  • Non-resident Pass-through Entity Withholding – a reduction of non-resident withholding from 5% to 3%, with the ability to avoid the withholding altogether if the investor submits a statement, under penalty of perjury, stating the investor will personally pay Ohio tax.
  • Economic Nexus – for sales tax purposes, creating nexus for sellers having gross receipts exceeding $100,000 or who engage in 200 or more separate transactions during the current or preceding calendar year.

We will monitor the Ohio tax update bill’s progress as it works its way through the Ohio Senate, and send updates as they become available. Please contact Paul Valencic or your Maloney + Novotny LLC representative with any questions.

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