Ohio ~ Multiple Taxes: Budget Proposal Would Cut Income Tax Rates, Increase Sales Tax Rate

Ohio Gov. John Kasich has issued his executive budget proposal for fiscal years 2016-2017. Proposed tax changes include the following:

— individual income tax cuts of 15% in 2015 and an additional 8% in 2016 (23% total), with matching withholding rate cuts;

— elimination of income tax for businesses and pass-through entities with gross receipts of $2 million or less;

— increase of the personal exemption from $2,200 to $4,000 for taxpayers earning less than $40,000 and from $1,950 to $2,850 for those earning between $40,000 and $80,000;

— repeal of the retirement income credit, Social Security deduction and senior credit;

— increase of the sales tax rate from 5.75% to 6.25%, including expansion of the tax base to include services, such as debt collection, lobbying, and public relations;

— reduction of the motor vehicle and watercraft trade-in value tax exemption to 50%;

— capping the vendor’s discount for timely filing at $1,000 per month;

— increase of the commercial activity tax (CAT) rate from 0.26% to 0.32%;

— decrease the alternative minimum tax on the CAT from $800 to $150 for those with gross receipts from $1 million to $2 million;

— elimination of early payment discounts for cigarette tax and other tobacco products tax; and

— imposition of severance tax at a rate of 6.5% on the gross market value of hydrocarbons.

Budget Recommendations: The State of Ohio Executive Budget Fiscal Years 2016-2017, Office of Ohio Governor John Kasich, February 2, 2015



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