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Ohio's 2018-2019 Budget

State and Local Tax|Tax

By Brent Songer

On June 30, 2017 Governor Kasich signed House Bill 49, a FY2018-2019 budget for the state of Ohio. The Ohio Society of CPAs and practicing CPAs alike seem pleased with the outcome, as it contains several taxpayer-friendly provisions and some old favorites. Some highlights relevant to businesses and individuals include the following:

  • Small Business Deduction – Extension of the current business income deduction, allowing 100% of business income up to $250,000 to be deducted. Business income in excess of that is taxed at a flat rate of 3%, and all other non-business income will continue to be subject to the graduated rate schedules.

    College or Disability Savings Deduction – House Bill 49 doubles the maximum deduction per beneficiary from $2,000 to $4,000 for tax advantage college savings plans, as well as disability expense savings accounts. Effective tax years beginning 1/1/2018 or after.

  • City Net Profit Returns – Starting 1/1/2018, businesses filing Net Profit returns will be able to do so via the Ohio Business Gateway on a combined return, reporting all income and tax due for applicable municipalities. This will be an election that automatically renews until terminated by the taxpayer. While the goal with this provision is to help simplify filing requirements, please note that not all cities use the Net Profit returns, so taxpayers should evaluate each filing jurisdiction.

  • Current “Throw-Back” Provision Eliminated – The throw-back provision previously required taxpayers to attribute sales outside of the municipality to the taxpayer’s apportionment if the taxpayer is “not subject to tax” where the product is shipped.  House Bill 49 eliminates this provision.

  • Estimated Payments – House Bill 49 will allow individual municipal income taxpayers to pay fourth-quarter estimates by January 15 of the ensuing tax year (same as the Federal fourth-quarter estimated payment date).

  • City Tax Return e-Filing - The Department of Taxation will study the feasibility of e-filing municipal returns and will be issuing a report on its findings by 1/1/2018

  • Sales Tax Holiday – Coming August 2018 for three days – items under certain categories/price ranges will be exempt from sales tax.

As mentioned above, many CPAs are pleased with the outcome of H.B. 49 and the increased effort to simplify municipal income tax laws.  If you have any questions about House Bill 49 or navigating the complicated municipal income tax provisions, please contact Schneider Downs or visit the Our Thoughts On blog.

More information on H.B. 49 and the Ohio Society of CPAs summary can be found here.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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