COLUMBUS – The Ohio Senate passed legislation Tuesday, sponsored by State Senator Bill Beagle (R-Tipp City), which clarifies language adopted in the state’s main operating budget earlier this year that lowers the tax burden for all small businesses.
“Small businesses drive Ohio’s economy, they make up nearly 98 percent of all businesses in the state and employ half of Ohio’s private workforce,” said Beagle. “These tax cuts will continue to empower small business owners to expand, make new investments, add more employees to their teams and remain competitive in a global marketplace.”
Senate Bill 208 makes clear the intention of the General Assembly to exempt 75 percent of the first $250,000 of income in tax year 2015 and 100 percent of the first $250,000 for tax year 2016. The remaining 25 percent of income in tax year 2015 will be taxed according to existing graduated rate tables with a 3 percent cap. All taxable income above $250,000 in both tax years will be taxed at a flat 3 percent.
The Small Business Exemption will now be incorporated into the 1040 form in order to increase participation of eligible filers. Previously, the exemption was on a separate schedule of tax forms and as a result many eligible filers did not access the tax exemption designed to encourage growth and that will allow Ohio small business owners to invest back into their companies.
The changes in this bill will reduce tax revenue by an estimated $77.4 million in Fiscal Year 2015 and an estimated $5.7 million in Fiscal Year 2017, totaling approximately $83.1 million over two years. The cost of the bill in Fiscal Year 2017 is attributed to an additional change that ensures that both individual filers and small businesses can claim all of the deductions and tax credits the tax code allows.
A provision was added to the bill to restore $44 million of Tangible Personal Property (TPP) supplemental reimbursements to schools vetoed in House Bill 64. Additionally, it changes the underlying mechanism of the TPP tax reimbursement payments for future years and provides districts a slower glide path and a more predictable formula with regards to the phase out of TPP reimbursements.
Senate Bill 208 will now be sent to the Governor for signature.