Significant Changes Coming With Ohio’s Biennial FYE 2015 Budget
The state’s biennial budget, effective July 1, 2013, plans to cut $2.7 billion in taxes to individuals and businesses over the coming three years. Key highlights include:
- The state’s sales tax rate increases .25% to 5.75% on Sept. 1, 2013. Also, products delivered digitally (music, books, etc) and magazine subscriptions will now be subject to sales tax.
- Individual income tax rates will decrease by 10% over the three-year budget period
- Investors in Ohio pass-through entities will be entitled to a deduction of up to $125,000 (if married filing separate, $62,500 each) or 50% of the first $250,000 of Ohio small business income passed through to them.
- The annual minimum Commercial Activity Tax will be modified to a teired structure based on taxable gross reciepts (TGR). Taxpayers with TGR between $1 million and $2 million will pay a minimum tax of $800 plus the usual .26% on TGR over $1 million. Taxpayers with TGR between $2 million and $4 million pay a minimum of $2,100 plus the usual .26% on TGR over $1 million. Taxpayer with more than $4 million in TGR will pay a minimum tax of $2,600 plus the .26% on TGR over $1 million. For example, a taxpayer that usually has $1.5 million in TGR per year will see an increase of $650 per year in CAT over the previous law’s calculation.
- The Homestead exemption for Real Property Tax will revert to being means-tested, limiting the exemption for many Ohioans. Currently eligible participants are not impacted. Also, the 10% and 2.5% “roll backs” (reductions) will be eliminated for levies passed in Nov. 2013 and beyond.
Ohio’s news release on the above can be read here, and a summary of the evolution and enacted version of the bill prepared by Ohio’s Legislative Service Commission can be found here.
