News and Analysis
OMA Connections Partner Roetzel & Andress has summarized changes made to Ohio’s income tax system for tax year 2019. Key changes include:
- The top personal income tax rate is now 4.797%, down from 4.997% previously.
- There is a newly enacted non-refundable credit for investing in Ohio Opportunity Zones. To claim it, you must complete an approved application and obtain credit certificate.
- For business income deductions, Ohio now uses the concept of “modified adjusted gross income” (which is the Ohio adjusted gross income, plus the business income deduction claimed on your Ohio income tax return). If you do not claim the business income deduction, the Ohio modified AGI change will not impact your Ohio income tax.
See the full summary here. 9/9/2019
The Office of Budget and Management reports that Ohio’s state government in August collected 3% more tax revenue than officials had predicted, with the month’s total receipts $62.5 million above the estimate. For the first two months of Ohio’s fiscal year — July and August — state tax receipts were up roughly $92 million compared to the same time in 2018.
August’s non-auto sales taxes exceeded the forecast by $28.1 million; auto sales taxes were $9.8 million higher. Collections from the Commercial Activity Tax exceeded estimates by $18.2 million, while personal income taxes were $15 million over projections. 9/9/2019
JobsOhio has published an infographic that illustrates the Buckeye State’s unique and appealing pro-business assets, which continue to attract new economic development projects. It highlights business-friendly tax provisions, such as the 0% rate for the commercial activity tax on products sold outside of Ohio; no state tax on corporate profits; and no state tax on personal property. The infographic also emphasizes Ohio’s strong economic development network, as well as its geographical, infrastructure, and R&D advantages. 8/29/2019
With the new fiscal year underway, Ohio’s state government tax receipts were up nearly $30 million in July compared to July 2018. The Management’s Monthly Financial Report, published by the Office of Budget and Management, shows that year-over-year total receipts in the General Revenue Fund were $2.96 billion — up $249.9 million (9.2%). Revenue from the commercial activity tax was up $14.5 million, or 28.3%, versus the previous July. The report also noted that Ohio’s employment was higher by 28,800 jobs in June compared to a year earlier, with manufacturing employment growing by a net 5,200 jobs. 8/13/2019
Across the United States, property taxes are a significant source of local government revenue — and manufacturers represent a significant portion of property taxpayers. This week, the Tax Foundation published an interactive map that allows users to see the median property tax bill paid in every U.S. county during FY 2016, the most recent year available. In Ohio, the highest property tax burden was in Delaware County, with the median bill exceeding $5,000. In several rural Ohio counties, the figure was less than $1,000. 8/7/2019
Following the enactment of Ohio’s new state budget last month, the OMA published summaries of key tax-related provisions impacting manufacturers. Now, OMA Connections Partner and accounting firm Clark Schaefer Hackett has compiled a comprehensive but easy-to-digest summary of the other notable tax provisions in the budget — including an opportunity zone credit and the 4% individual income tax rate reduction. See the tax summary here. 7/31/2019
With the new state budget in place, the Ohio Legislative Service Commission has updated its infographics on budget-related topics. One particular graphic provides an overview of the General Revenue Fund (GRF), illustrating the state’s funding sources and the primary recipients of state tax dollars.
In FY 2019, Ohio’s Medicaid program consumed 45% of GRF dollars (more than $15 billion), making the health care program for low-income residents the state’s largest spending item. The next largest recipient was K-12 schools, which received about 24% of GRF dollars (more than $8.1 billion). 7/29/2019
The Ohio House and Senate this week settled their differences on tax issues in the two-year operating budget, House Bill 166. Included in the final language were two priorities of the OMA Tax Committee, as well as a provision that was a priority for Ohio’s general business community. Thank you to the members who worked on these efforts.
Key tax provisions affecting manufacturers include:
- EXEMPTION FOR FOOD MANUFACTURERS: Expands the sales-and-use tax exemption for cleaning equipment and supplies used to clean equipment that produces or processes food. The exemption, which had applied only to dairy food processors, will now be afforded to the makers of any food for human consumption.
- CREDITS FOR CAPITAL INVESTMENT: Expands eligibility for the state’s Job Retention Tax Credit. Aimed at manufacturers, the provision expands eligibility based on new capital investment, as opposed to payroll or employee count.
- BUSINESS INCOME TAX DEDUCTION: Retains the business income tax deduction at the current level of $250,000 for pass-through entities, as well as the 3% special flat tax rate for income above that threshold. Provides an across-the-board state income tax cut of 4%. The OMA worked with business allies to save the existing deduction, which at times seemed doomed during the process.
The budget does eliminate lawyers and lobbyists from taking advantage of the income tax deduction — a provision that could have unintended consequences for manufacturers, especially those who employ in-house counsel. The OMA will continue to study the issue to determine the impacts on manufacturers. 7/17/2019
Up to this point, U.S. Generally Accepted Accounting Principles (GAAP) new lease accounting rules for non-public filers were to be applied for annual periods, beginning after Dec. 15, 2019. But OMA Connections Partner Clark Schaefer Hackett reports that the Financial Accounting Standards Board (FASB) voted this week to extend the non-public company implementation date for the new lease accounting rules for one additional year. Read more about this from CSH here. 7/18/2019
OMA Connections Partner Clark Schaefer Hackett, a CPA firm with locations across Ohio, recently published insight for manufacturers being negatively affected by tariffs. According to the firm, some companies are considering Foreign Trade Zones (FTZs) to provide some relief. An FTZ is a designated, restricted-access site in the U.S. that is legally considered outside of customs territory for the purpose of duties and taxes, so goods can be imported duty-free and without formal customs entry.
While Chinese imports do not qualify for exemption under FTZ rules, companies importing from countries other than China may be able to benefit. Companies can establish a designated FTZ within their warehouse or facility, and products imported into the zone can then be mixed with U.S. sourced goods. 6/30/2019