Highlights of Ohio's Latest Tax Law Changes | Tax Tip of the Week | No. 214

Ohio's Tax Law Changes Started This Week

Ohio Governor John Kasich and the Ohio General Assembly recently approved a new two-year state budget that includes some significant state tax law changes.  The first change became effective September 1, 2013.  The following are the highlights of the new tax laws:

• The state sales and use tax   increased from 5.5% to 5.75% on September 1, 2013.  Combined with the additional county taxes, this means the new sales tax rate for Montgomery country residents will be 7.25%.  Greene and Warren county residents will now pay a 6.75% sales tax.

• A 10% personal income tax cut will be phased in over three years.  In 2013, you will see an 8.5% reduction in your state income tax.  In 2014, the tax rate cut will increase .5% to a 9% reduction in state income taxes.  In 2015, an additional 1% tax rate cut will become effective for the full 10% reduction in state income taxes.

• Ohio small business owners will be entitled to take a 50% tax reduction on the first $250,000 of business income in 2013.  This maximum $125,000 tax savings is available to owners/investors of companies structured as pass-through entities (S-corporations and partnerships)

• The $20 personal exemption credit will be available only to households with Ohio taxable income under $30,000

• The 10% and 2.5% “rollbacks” (reductions) of property taxes will be eliminated for any new and replacement tax levies passed in November 2013.  Existing levies and renewals will continue but will not increase if new local real estate millage is added.

• The “Homestead Exemption” available to Ohio property owners age 65 and over will become means tested.  This means that only homeowners age 65 and older will receive the property tax reduction if their income is less than $30,000 for those applying in 2014.  Currently eligible homeowners will not be impacted.

• Other changes are being made to the Commercial Activity Tax (CAT), Motor Fuel Receipts Tax, sales taxes with Ohio nexus and tobacco taxes.

State officials say these tax laws changes will create $2.7 billion in tax cuts for individuals and small business while increasing and additional $1.5 billion in new funds for education over the next three years.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt - the guy behind TTW...until next week.