Ohio Tax Reform May Mean Big Changes for Contractors
Ohio Governor John Kasich released the fiscal year 2018-2019 budget on January 30, 2017. Key tax reform proposals of particular interest to commercial builders and construction contractors include:
Simplifying Municipal Tax Filing for Businesses to Encourage More Economic Growth:
The Ohio local tax compliance burden is onerous for contractors who work across the state in multiple jurisdictions that may change from year to year. The Ohio local tax compliance is unnecessarily burdensome in its volume (literally hundreds of different local tax systems) and is a barrier for businesses coming to Ohio. As proposed, Ohio would streamline the municipal tax compliance process by having businesses file just one form and a single payment online, that the Ohio Department of Taxation would distribute to the appropriate local government. This change would save money and resources for businesses, as well as saving municipalities about $9 million a year. See our blog post: Ohio Construction Tax Policy Considerations for Contractors.
Moving Toward a Consumption-Based Tax and a Reduced Ohio Income Tax System:
This budget proposes increasing the Ohio sales tax by a half percent, from 5.75 percent to 6.25. percent, as well as moving away from reliance on income taxes. The budget proposes expanding the tax base on tobacco, alcohol, and increased tax on oil and gas production. The budget seeks to broaden the tax base to include discretionary services such as cable TV subscriptions, elective cosmetic surgery/procedures, lobbying, landscape design, interior design and decorating, travel packages and tours, and repossession services.
Fewer tax brackets, lower tax rates, and increased personal exemptions:
These proposed changes could deliver a 17 percent income tax cut over fiscal years 2018 and 2019 for Ohio workers, and eliminate state income taxes for more than 350,000 lower income Ohio households, improving Ohio’s fiscal climate for individuals and businesses trying to attract talent.
If you have questions or concerns with how these changes will impact you or your clients, please contact a member of the Barnes Dennig team here with any questions.