On June 30, 2017, Gov. John Kasich signed Ohio H.B 49 (the 2018-19 Ohio budget) into law. This Bill includes a number of tax provisions, some of which are highlighted below.
Personal Income Tax
- Exclusion of 100% of business income up to $250,000 with the excess taxed at a flat 3% remains in effect.
- Number of tax brackets reduced from 9 to 7; top marginal rate remains at 4.997%. No tax owed on taxable income of $10,500 or less. Effective for tax year 2017.
- Annual deduction for contributions to college savings plans and disability expenses savings accounts increased to $4,000 (from $2,000) per beneficiary beginning in 2018.
Municipal Income Tax
- Effective for tax years beginning on or after 1/1/2018, businesses may file a single annual municipal net profit tax return and make a single payment of the tax via the Ohio Business Gateway. This is an elective provision. The election is to be made by the first day of the third month of the year to which it is to apply (e., by 3/1/2018 for 2018). It does not apply to personal income taxes or to taxes withheld from wages.
- The current “throw-back” provision is eliminated beginning in 2018. Sales will be taxable to a municipality if goods are shipped from and delivered to the municipality or if goods are delivered to the municipality from elsewhere if employees regularly solicit sales in the municipality.
- Fourth quarter estimated tax payments for individuals are now due by January 15 of the following year beginning with tax year 2018. Business fourth quarter estimated tax payments remain due by December 15 (for calendar year taxpayers).
Sales and Use Tax
- Out-of-state sellers must collect and remit taxes effective 1/1/2018 if the seller has annual Ohio sales of at least $500,000 in the current or preceding calendar year and either uses in-state computer software to make Ohio sales or contracts with a third party to provide content distribution networks in Ohio to accelerate or enhance the delivery of seller’s website to Ohio consumers.
- Provides for a 3-day sales tax holiday/exemption from August 3 through August 5, 2018 for clothing priced at $75 or less, and school supplies and instructional materials priced at $20 or less.
- Provides for a tax amnesty program from 1/1/2018 through 2/15/2018 for the following qualifying delinquent taxes: financial institution tax; commercial activity tax; state income tax; alcohol, tobacco and cigarette excise taxes; state and local sales and use taxes; school district income tax; and local alcohol and cigarette excise taxes. Applies to taxes due and payable as of May 1, 2017. All penalties and 50% of any interest accrued on the delinquency to be waived.
If you have any questions on how these changes will impact you, please feel free to call us and we would be happy to discuss what any or all of this means specifically to you.