Tax Alert

Ohio Enacts Tax Law Changes

(July 29, 2013)

On June 30, 2013, Ohio Gov. John Kasich signed into law Ohio House Bill (HB) 59, which includes changes to Ohio tax law. Major highlights of HB 59 include:

  • The state sales and use tax rate will increase from 5.5 percent to 5.75 percent effective on Sept. 1, 2013. Many cities and counties impose a sales tax in addition to the state rate.
  • Beginning Jan. 1, 2014, digital products including streaming video services, music downloads, electronic books, and similar items will be subject to sales and use tax.
  • Beginning with the 2013 tax year, the individual income rates will be reduced 10 percent over three years, with the highest marginal rate being reduced from 5.925 percent to 5.421 percent in 2013, 5.392 percent in 2014, and 5.333 percent in 2015 and beyond.
  • An individual income tax deduction for sole proprietor and pass-through entity income included in federal adjusted gross income will begin with the 2013 tax year. The deduction is equal to 50 percent of the amount included in federal adjusted gross income, with a maximum deduction of $125,000. Taxpayers with multiple pass-through entities or sole proprietorships must aggregate their activities when computing the deduction.
  • New minimum tax amounts for the commercial activity tax (CAT) will be effective Jan. 1, 2014:
    • $800 for CAT taxpayers with Ohio receipts between $1 million and $2 million
    • $2,100 for CAT taxpayers with Ohio receipts between $2 million and $4 million
    • $2,600 for CAT taxpayers with Ohio receipts of more than $4 million
     

 

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tom.niedzielski@crowehorwath.com

Brian Myers
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brian.myers@crowehorwath.com

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