OSCPA staff report
Gov. DeWine signed on Tuesday Senate Bill 246, known as the SALT cap parity bill, which levies a tax on a pass-through entity's income apportioned to Ohio and authorizes a refundable income tax credit for an owner for such tax paid.
IRS Notice 2020-75 is what allowed states to enact legislation to clarify that taxes paid by a PTE do not count towards an owner’s $10,000 state and local tax limitation deduction for federal income tax purposes.
OSCPA offered proponent testimony before the House Ways and Means Committee in May for S.B. 246.
“S.B. 246 is a win-win for the State of Ohio and for Ohio business owners,” said Director of Tax Policy, Greg Saul, Esq., CAE. “This unique change to Ohio’s tax code will provide a tool for Ohio business owners to obtain potentially significant federal tax benefits with minimal loss to Ohio or municipal tax revenue.”
In his testimony, Saul stated that this legislation will make Ohio business owners more competitive with their counterparts in the 27 states that have already enacted similar legislation, and ensures Ohio taxpayers can immediately benefit from reduced federal income taxes and become more competitive with C corporations operating in Ohio.
With Missouri also recently passing their SALT legislation, Ohio and Missouri will become the 28th and 29th states to address this issue. See the map of states with pending or enacted legislation.