Ohio’s New Biennium Budget

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Posted on July 1st, 2013

There were a few controversial social measures in the new State biennium budget which was signed into law on June 30th by Gov. John Kasich. The State fiscal year begins on July 1, 2013 and the budget totaled $62 billion.

Putting social agendas aside, you should also be aware of the tax implications for you and your business with the new State of Ohio budget. Expect to see the following changes with varying effective dates:

  • Income tax
    • Cutting personal income tax rates ten percent across-the-board, phased in over three years (by 8.5 percent in 2013, 9 percent in 2014, and 10 percent in 2015 & beyond);
    • A 50 percent small business tax cut on the first $250,000 in net small business income;
    • Limitation on who can deduct the $20 per person individual income tax credit
    • Limitation on the deduction for the Ohio joint filing credit
  • The minimum tax due for the commercial activity tax changed:
    • 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
  • Increasing the state sales tax rate from 5.5 to 5.75 percent beginning January 1, 2014;
  • Suspending for three years the inflation-indexing adjustments of the nine income tax brackets and the personal and dependent exemptions;
  • Maintaining the property tax homestead exemption for all seniors who currently have it, but limiting eligibility for the homestead exemption going forward for first-time applicants to those with less than $30,000 in annual income; and
  • Veto Power
    • Many items were line-item-vetoed from the budget bill by Gov. Kasich. Most notably was the Medicaid expansion language thus giving him maximum flexibility as discussions continue and keeping the conversation alive.
    • More issues that were vetoed by Gov. Kasich are summarized here.
  • The entire Biennial Budget bill (H.B. 59) can be viewed which includes boxed veto text language.
Sources:
Ohio Tax Changes (Vorys)
Ohio Statehouse Update (Vorys)
Conference Committee Reports (Vorys)