Republican Leaders Agree on Ohio Tax Plan
With both the House and Senate controlled by Republicans, significant changes to Ohio’s tax landscape were certain to occur after Gov. Kasich unveiled his proposed budget for the upcoming biennium beginning July 1, 2013. After yesterday’s announcement that Republican legislatures have reached an agreement, the specifics of those changes are becoming more clear, reflecting a shift towards a consumption-based tax structure. While not as drastic as first proposed by the Governor, here are some of the highlights:
- 10% reduction in Ohio’s personal income tax to be phased-in over three years;
- Increase state sales tax rate from 5.5% to 5.75%;
- Expand sales tax to cover digital goods, such as book and music downloads;
- Small-business tax break allowing owners of pass-through entities to deduct 50% of the first $250,000 of business income;
- Commercial activity tax rate (above the $150 minimum tax) will apply to gross receipts above $500,000 (reduced from $1 million);
- Eliminate 12.5% property tax rollback for future levies; and
- Eliminate homestead exemption for seniors earning more than $30,000 of income.
Focused on creating Ohio jobs, these changes continue Gov. Kasich’s emphasis on reviving Ohio’s economy by creating a more business friendly climate through tax cuts for Ohio residents and small businesses. It is estimated that Ohioians will save $2.6 billion in taxes under the new budget. The Budget Bill must be passed by the legislature and signed by the Governor before July 1, 2013.
We will have more details about the specifics of these changes and how they will affect Ohio taxpayers in the coming weeks.