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Ohio Tax Changes

June 30, 2013 Gov. John Kasich signed Ohio’s new two-year budget plan, which contains several changes to Ohio tax law. The bill takes effect July 1, but different provisions will have different effective dates.

Key components of the plan include:

Personal income tax

  •  A 50 percent small business tax cut on the first $250,000 in net small business income
  • Phase in of a 10 percent rate reduction over the next three years
  • Limitation on who can deduct the $20 per person individual income tax credit
  • Limitation on the deduction for the Ohio joint filing credit

Sales tax

  • Increase in state tax rate from 5.5 percent to 5.75 percent
  • The governor line item vetoed a portion of the bill that would require taxpayers with more than $1 million in internet sales tax to collect Ohio sales tax. This provision was introduced in response to the Marketplace Fairness Act that is currently pending federally.

Commercial activity tax

  • The minimum tax due for the commercial activity tax was changed. The new minimums are:
    • For taxpayers with receipts equal to or less than $1 million, the minimum remains $150
    • For taxpayers with receipts greater than $1 million but less than or equal to $2 million, the minimum is now $800
    • For taxpayers with receipts greater than $2 million but less than or equal to $4 million, the new minimum is $1,100
    • For taxpayers with receipts greater than $4 million, the new minimum is now $2,600

  • The tax over $1 million is still computed in the same manner the above break down is for determining the minimum fee due for the Commercial Activity Tax

These are just some of the highlights. BHG&P will continue to analyze the bill and provide additional information.