Ohio Governor John Kasich on June
30, 2013 signed Ohio House Bill 59, which made significant changes to Ohio
taxes.
Individual
Income Tax Decrease
Individual
income tax rates will be cut 10% over three years.
The
$20 personal exemption credit will be available only to taxpayers with Ohio taxable
income under $30,000.
Sales
Tax Increase
Effective
September 1, 2013 Ohio’s sales and use tax rate will increase to 5.75% (from
5.5%)
Minimum Commercial Activities Tax (CAT) Increase
The Commercial Activity Tax (CAT)
was previously $150 on the first $1 million in annual gross receipts,
regardless of total annual gross receipts. The CAT tax on the first $1 million
will now vary depending on the taxpayer’s total annual gross receipts. The new
minimums are as follows:
- $1 million or less in annual gross
receipts – $150
- From $1 million to $2 million in annual gross
receipts – $800
- From $2 million to $4 million in
annual gross receipts – $2,100
- More than $4 million in annual gross
receipts – $2,600
Please note that the above apply only
to first $1 million in annual gross receipts. Receipts over $1 million will continue
to be taxed at a 0.26 percent rate.
Small Business Income Deduction
There is a new tax deduction for
small business income starting in 2013. The deduction will be the lesser of $125,000
($62,500 per spouse if filing separately) or 50% of the small business income
includable in federal adjusted gross income.
The deduction will apply to sole
proprietors as well as to investors in passthrough entities.
The deduction will not be available
to trusts and restates.
New Ohio Earned Income Tax Credit
New
for 2013, the new credit will be equal to 5% of the federal tax credit.
New
Sales Tax on Downloads
Beginning
in 2014, sales tax will apply on downloads of music, books and videos.
