New Tax Cuts Approved By Governor Kasich

Jul 09, 2015

Just over a week ago, a two-year, $71.2 billion state operating budget was signed by Ohio’s Governor, John R. Kasich. This bill will provide income tax cuts for small businesses and individual taxpayers beginning in the 2015 tax year. Impending changes as a result of the new budget include:

  • Taxpayers may deduct the lesser of 75% of small business income or $187,500 ($93,750 per spouse) if the annual business earnings are less than $250,000. Taxes are to be eliminated for these small businesses altogether by 2016.
  • Small businesses earning over $250,000 will be taxed at a flat rate of 3%.
  • Individual income tax rates will be lowered to 0.495% for individuals earning less than $5,000 of income and max out at 4.997%.
  • The exemption for tangible personal property of a qualified energy project using renewable energy resources has been extended from 2016 to 2021 –  as long as the property meets all necessary requirements. In order for the exemption to be extended, the tangible personal property was exempt beginning in tax years 2011 through 2021 and the property’s certification must not have been revoked.
  • Municipal corporations and townships are permitted to levy a tax on sales in the tourism development district. This tax will be paid by the person making the sales at a rate of 0.5%, 1.5%, or 2% of gross receipts from sales within the tourism development district.
  • The tax on the use, consumption or storage of cigarettes will increase by $0.35 to $1.60 per pack.

After vetoing 44 provisions, most of which would have provided benefits to large businesses and industries, Kasich’s new budget will provide an overall 6.3% income tax cut in 2015 as part of a $1.9 million net tax reduction. Along with income tax cuts, the bill is expected to increase funding to schools grades kindergarten through 12 and police training. In addition,  it requires all state colleges to propose ways to cut student costs by at least 5%.

Additional information regarding Ohio’s new operating budget can be found here.

By: Halie Baker, Staff Accountant

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