Could possible tax changes impact your business’ ability to plan? Contact your state legislators today.
The Ohio House offered a substitute budget bill on the heels of the Governor’s previous recommendations. While there were a number of changes made across the spectrum of different policy issues, that will continue to be reviewed, several provisions would provide an unpredictable tax climate for small business and impact their ability to plan for the future.
The Governor’s budget made no changes to Ohio’s personal income tax. The current House version did offer an income tax cut. No income tax would be collected from individuals with an income of $22,250 or less. Marginal tax rates would be reduced by 4.7% for the next two tax brackets as well, which would lower the rate to 2.829% for income from $22,250 to $44,400 and 3.302% from $44,400 to $88,800.
The tax cuts would be paid for, in part, by reducing the maximum deduction for business income from $250,000 to $100,000.
Providing even more uncertainty for the business community, the House is preparing an amendment, to repeal a tax that allows pass-through businesses to pay a flat 3% tax rate on earnings over $250,000, as opposed to the typical income tax rate for earnings at that level of about 5%.
GCP recognizes preserving Ohio’s small business tax deduction on the first $250,000 in business income has encouraged investments for small businesses. We’ve heard directly from our members that utilize these dollars to reinvest back into their companies and workforce. Any changes made to this deduction can seriously impact future activity and growth.
The Ohio House of Representatives aims to vote on the bill this week. GCP encourages our members to be heard throughout the process and contact your state policymakers today. Remind your elected leaders of the importance of preserving this critical tool for small businesses.