TAX POLICY 

Our approach since issuing our tax reform task force report is moving Ohio toward a simpler, more competitive tax structure that maximizes the benefits for everyone while minimizing the effects on any particular segment.

  • Ohio-based Taxes: Conform bonus depreciation and enhanced expensing allowances (eliminate the 5/6 addback, H.B. 69), protect the Business Income Deduction (BID) as Ohio moves to a 2.75% flat tax on nonbusiness income (S.B. 3 & H.B. 30), defend our CAT policy positions ($3M/$6M exemptions), and prevent sales tax expanding to professional services. Support Ohio tax conformity to federal IRC changes (H.B. 14 & S.B. 9).
  • Municipal Income Tax: Pursue efforts to ease the withholding burden on employers while ensuring taxpayers can secure refunds, stop double taxation by requiring reciprocity credits, and continue to simplify filings for the net profits tax. 
  • Property Tax: Ohio’s Joint Committee on Property Tax Review and Reform released its report on Jan. 2 – potential solutions include increasing transparency in property tax assessments & TIFs, capping annual property tax increases, creating relief programs for senior citizens on fixed incomes (70+ years old and $70K or less), and standardizing the property reassessment cycle.

 

WORKFORCE DEVELOPMENT

Drive Ohio’s state of business by building today’s workforce and ensuring that tomorrow’s workforce is prepared for the demands that lie ahead.

  • Childcare: Encourage public-private partnerships designed to increase access to affordable, quality childcare capacity near Ohio businesses and work sites (H.B. 2 & S.B. 32; H.B. 41). Tax credits should fund training initiatives to help employers partner with childcare providers, non-profit, government and community organizations to expand affordable, quality options to meet workforce needs.
  • Housing: The Ohio Senate Select Committee on Housing in April 2024 released its report findings and 23 recommendations. Ohio has several longstanding housing programs and new funding sources, including the recently enacted Ohio Homebuyer Plus savings accounts, that should be better aligned on driving the desired outcome of increased ownership and supply.
  • Artificial Intelligence (AI): AI is a rapidly evolving field, with various legislative initiatives being considered to ensure the safe and ethical use of these technologies. Although Ohio legislation to date has been focused on preventing various deepfakes, our future efforts will aim to balance the benefits of AI with the need to mitigate its risks and ensure it is used responsibly.

 

CPA PIPELINE 

Continue our commitment to expand and diversify the accounting pipeline, including H.B. 238 (135th GA) signed into law by Gov. DeWine on Jan. 8, 2025.

  • Automatic mobility provided to licensed CPAs from other jurisdictions, effective April 9, 2025.
  • Two licensure pathways available to attract more CPA candidates, effective Jan. 1, 2026.

 

OHIO BIENNIAL BUDGET BILL:

In his final budget bill, Gov. Mike DeWine took the veto pen to the most items of his governorship, striking 67 items out of House Bill 96, before signing it just before midnight on June 30, 2025. The final enacted version of Substitute House Bill 96, and resources are available here and here. OSCPA managed to avoid being among the vetoes, and our following priorities were enacted – TAXCD references below are to this document.

Flat tax rate on nonbusiness income: TAXCD103
R.C. 5747.02, 5747.025, 5747.05, Section 757.120

Ohio became the 15th state to eliminate graduated income tax brackets in favor of the flat-rate model, moving from 3.5% to 2.75% on nonbusiness income phased-in over two years, without any negative changes to the Business Income Deduction (BID). Those making above $100,000 will pay 3.125% in tax year 2025, and everyone above $26,050 will pay 2.75% in tax year 2026. This will make Ohio’s flat tax the second lowest in the nation – behind only Arizona, which currently has a flat rate of 2.5%. This move also effectively eliminates the marriage tax penalty for the majority of Ohio taxpayers.

Municipal income tax refunds: TAXCD72
R.C. 718.12, 718.19, 718.90, and 718.91

Under current law, taxpayers are only able to file municipal income tax refund claims up to the date the tax was due or paid, whichever is later. Therefore, taxpayers that file an extension and pay all amounts due by the original due date of the return are only able to file a refund through the original due date of the return. TAXCD72 allows a taxpayer who received a valid extension of the tax return due date to file a municipal income tax refund claim within three years after (i) the date of the overpayment or (ii) the date the return was due, including any valid extension, whichever is later. 

Municipal net profits tax – extended due date: TAXCD119
R.C. 718.05, 718.85

Under current law, the municipal filing deadline for non-profits’ 990-T return is due prior to the federal return – under ORC §718.01 (G)(1)(b) non-profits are subject to tax on their unrelated business income. For calendar year taxpayers, their federal return is not due until May 15, but their Ohio municipal due date is April 15. TAXCD119 extends the initial due date to match the federal income tax return due date (May 15) for taxpayers with a federal income tax return due date after April 15. The November extended due date is not changed since NFPs federal returns are due on Nov. 15. Applies to returns required to be filed on or after Jan. 1, 2026.

PTE SALT cap: TAXCD74
R.C. 5747.38, 5747.39; Sections 757.60 and 801.180

Ohio allows a pass-through entity (PTE) to make a state-level election (IT 4738) to effectively pay tax to Ohio that is deductible for federal income tax purposes. When there are tiered levels of PTE ownership though, the credit mechanism that was previously in Ohio law restricted many businesses’ ability to save federal income tax. The practical effect forced each PTE level to pay a direct tax in a duplicative manner causing cash-flow concerns. TAXCD74 permits upper-tier PTEs to file returns to claim credit for tax paid by lower-tier PTEs. Applies to taxable years ending on or after Jan. 1, 2025.

PTE tax estimated payment dates: TAXCD58
R.C. 5747.43, Section 801.90

Under current law, estimated payment due dates across the individual income, school district income, fiduciary income, and the various pass-through entity tax forms are not consistent. H.B. 96 provides uniformity amongst the tax types by modifying the second and third estimated payment dates for the electing and withholding pass-through entity taxes and moves the due dates up by one month from July 15 to June 15 and from October 15 to September 15. Applies to taxable years beginning on or after Jan. 1, 2026. 

ESOPs: ACCCD3
R.C. 4701.04, 4701.01, 4701.16

ACCCD3 adds clarity to ownership requirements for public accounting firms operating under an Employee Stock Ownership Plan (ESOP) structure, or which are part of an alternative practice structure (APS). This creates a single paragraph that directs all public accounting firms to have greater than fifty percent of the equity interests or shares of a firm be held by those holding an Ohio permit or foreign certificate; and for more than fifty percent of the directors or trustees of an ESOP to hold an Ohio permit or foreign certificate. This update closes a loophole in the current law that could be interpreted that only a majority of the ESOP trustees are required to be a CPA to be a public accounting firm, rather than the owners of the corporation itself.