The Ohio House Finance Committee on May 2 accepted several tax changes to the amended version of Ohio’s biennial budget, now Sub. House Bill 166. Chief among them is to significantly cut the benefits from Ohio’s Business Income Deduction (BID) by:
Legislators are also giving serious consideration to eliminating the flat 3% rate for PTE income over $250,000. (The Legislative Service Commission has reported that the 3% rate represents between 34% and 41% of the BID’s over $1.2B cost).
Some of the money raised will be used for $300 million in personal income tax cuts. The current language eliminates the bottom two brackets, taking Ohio from seven brackets to five. As proposed, all earnings below $22,500 will not be taxed. For income between $22,500 and $88,800, the tax rate would be cut by 4.7%. The marginal rates on the top three brackets remain the same.
Ohio Taxable Income |
Proposed Marginal Rate |
> $22,250 < $44,400 |
$315.41 plus 2.829% > $22,250 |
> $44,400 < $88,800 |
$942.14 plus 3.302% > $44,400 |
> $88,800 < $111,100 |
$2,408.31 plus 3.960% > $88,800 |
> 111,100 < $222,200 |
$3,291.39 plus 4.597% > $111,100 |
> $222,200 |
$8,398.66 plus 4.997% > $222,200 |
Other tax changes that were included in Sub. H.B. 166 include:
A tax credit of $40 million for motion picture productions filmed in Ohio is also on the chopping block, as is a tax credit for political contributions.
House Republicans say the overall tax plan provides a net $100 million reduction in taxes over two years. H.B. 166 will undergo more changes early next week before a likely House vote mid-week. OSCPA is closely monitoring all these issues and more and will provide updates as details are unveiled.
Members who have concerns about any of these provisions are encouraged to contact OSCPA, and to quickly share their views directly with the Ohio state representative. (Click here to find out how to do so.)