Recent Supreme Court Ruling May Impact Ohio Local Taxes
The U.S. Supreme Court recently ruled on a Maryland case involving the state’s credit for taxes paid to other states. Maryland has two levels of tax on resident income; the usual state income tax and a county tax that is also levied on non-residents on the portion of their income earned in Maryland. This county tax caused income to be taxed twice at that level, something prohibited by the dormant Commerce Clause because it discriminates against interstate commerce.
This is something like what Ohio residents face with our local tax system. Many cities offer only partial credit for taxes paid to cities where the income is earned, others offer no credit at all, resulting in double tax on the same income. Local tax structures in Pennsylvania, Indiana and New York may also be impacted by this ruling. We will watch for developments in this area and post updates as they arise.
