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 Deduction – Extended 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 Rate – Extended the 3% flat business tax. Certain business owner’s taxable “business income” is taxed at a flat 3% rate.
- Personal Income Tax Rates – Reduction 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 Rates – Reduction of rates. An overall 4% reduction of trust and estate income tax rates.
- Non-resident Pass-through Entity Withholding – Remained unchanged. Tax rates for pass-through entities filing form IT-1140 are unchanged.
- Economic Nexus – Enacted 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.