Tax Changes That Impact Ohioans
In late June, the Governor signed the budget bill. The net effect of which will reduce income tax bills by about $1.9 billion over the next two years. The biggest change is an across the board rate reduction to the Ohio personal income tax rates. The tax rates for 2015 and beyond will be reduced by 6.3%. For example, the current top tax rate will decrease from 5.333% to 4.997% on Ohio taxable income over $200,000. In addition to the rate reduction, small businesses owners will continue to see advantageous tax benefits. Small business owners will be able to take advantage of the 75% of the first $250,000 of Ohio sourced pass-through income exemption for 2015 and will be able to take a 100% exemption for such income in 2016. Lastly, the business income exceeding the exemption amount will now be subject to a flat 3% income tax rate instead of the normal graduated tax rates.
The Governor’s original budget proposal included increased sales tax rates and an expansion to the number of services subject to sales tax, as well as an increase in excise tax on oil and gas production. Those provisions did not make it to the final budget bill. But, a 35¢ increase in the per pack cigarette tax was added. The tax is increased to a total of $1.60 per pack.
Prior to the recent Supreme Court ruling regarding same sex marriages, Ohio did not recognize those married taxpayers for state income tax purposes. Such taxpayers were required to file “single” returns for Ohio even though they were able to file a married return for federal tax purposes. As of June 26, 2015, Ohio will now follow federal tax status for state income tax purposes. Same sex married taxpayers who filed Ohio returns under the old guidance between October 11, 2013 and June 26, 2015 may go back and amend their Ohio returns to be consistent with their federal tax returns.
Just in time for “Back to School” shopping, Ohio has instituted a one-time sales tax holiday for early August. Eligible purchases include clothing priced at $75 or less, school supplies priced at $20 or less, and school instructional materials priced at $20 or less. The sales tax holiday runs from Friday, August 7, through Sunday, August 9.
Enjoy the remainder of your summer, and if you have questions about tax legislation or would like assistance in determining how to make the most of your tax provisions, the tax professionals at Ciuni & Panichi can help you start planning now. For more information, please contact David Reape at 216.831.7171 or email@example.com.
David Reape is a Principal in Ciuni & Panichi’s Tax Department. He has experience in all facets of taxation for individuals and closely-held businesses, along with their owners and key personnel. His clients are in a wide range of industries, including not-for-profit, manufacturing, service, restaurants, and health care.
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