Ohio Tax Update

Del YounglasTax Alert

Tax Alert from Maloney+Novotny

Recent Updates to State of Ohio Budget Bill

Paul E. Valencic, CPA

This is an update to my article written earlier this summer regarding the signing of Ohio’s state budget bill, which passed on July 18, 2019.

The state budget bill contains the following highlights:

  • Ohio Business Income DeductionExtended the Ohio business income deduction. Certain business owners are able to deduct the first $250,000 of business income from their federal adjusted gross income. **UPDATE** – Lawyers and lobbyists were excluded in the originally signed bill. Subsequent negotiations have preserved the deduction for lawyers and lobbyists and was unanimously voted back into law on October 10, 2019.
  • Business Income Tax RateExtended the 3% flat business tax. Certain business owner’s taxable “business income” is taxed at a flat 3% rate.
  • Personal Income Tax RatesReduction of rates. An overall 4% 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 $21,750.
  • Trust and Estate Income Tax RatesReduction of rates. An overall 4% reduction of trust and estate income tax rates.
  • Non-resident Pass-through Entity WithholdingRemained unchanged. Tax rates for pass-through entities filing form IT-1140 are unchanged.
  • Economic NexusEnacted for sale tax purposes. for sales tax purposes, creating nexus for remote sellers having gross receipts exceeding $100,000 or who engage in 200 or more separate transactions during the current or preceding calendar year. The above thresholds don’t apply to a “small remote seller,” defined as a remote seller whose gross annual receipts from remote sales in the United States (including affiliate sales) don’t exceed $1 million for the preceding calendar year.

Please contact Paul Valencic or your Maloney + Novotny LLC representative with any questions, or use this online contact form.