September 5, 2013
The Ohio budget bill passed a few months ago had significant tax changes for Ohio businesses and individuals. Some of the more notable changes that will affect most businesses and individuals are listed below.
- Sales tax rate is increasing by 0.25% as of September 1, 2013. If your business currently charges sales tax, you need to make the necessary changes to your system to begin charging the higher rate on September 1. For Franklin County the rate will go from 6.75% to 7.00%.
- Commercial Activity Tax (CAT) minimum fees are changing for tax years beginning January 1, 2014. If your gross receipts are under $1 million, the minimum fee is still $150. Annual gross receipts between $1 – 2 million minimum fee is $800; $2 – 4 million minimum fee is $2,100; Over $4 million minimum fee is $2,600. For example, a business with $1.2 million of gross receipts in 2014 will now pay $1,320 ($800 for the first million of receipts + 0.26% of $200,000 of receipts over one million). In 2013, the same business will only pay $670 ($150 for the first million of receipts + 0.26% of $200,000 of receipts over a million).
- CAT Filing Requirements – ALL returns must be filed and paid online effective January 2014. Previously, only the quarterly filers (annual receipts over $1 million) were required to file online.
- Small Business Income Deduction. Business owners (LLC, S-corp and Sole Prop.) will receive a 50% deduction on the Ohio return for business income up to $250,000 (maximum deduction of $125,000). For example, an S-corp has K-1 income of $100,000 the shareholder can deduct $50,000 of income on the Ohio return which could result in tax savings up to $2,666.
- Individual tax rates for Ohio are being cut by 10% and phased in over the next 3 years. Highest tax rate after phase in will be 5.333%.
- Homestead exemption for real estate taxes for Ohioans over age 65 will be eliminated if taxpayer makes over $30,000 of income. Current taxpayers age 65 or older will not lose it. It will only affect those turning 65 after January 1, 2014.