OMA Examines Tax Provisions in Senate Budget

This week, the OMA Tax and Finance Committee held its Q2 meeting, sponsored by OMA Connections Partners Fifth Third Bank and Schneider Downs.

Members heard from state Rep. Bill Roemer (R-Richfield), chairman of the House Ways and Means Committee. Roemer covered a range of committee priorities, including property tax modifications (proposed in House Bill 1) and a bill to simplify municipal income tax filings and reduce compliance costs (House Bill 121).

Experts from OMA Connections Partner GBQ Partners and Bricker Graydon, the OMA’s general counsel, highlighted the tax proposals in FY2024-25 state budget. (See this slide presentation.) Here are some of the noteworthy changes in the Senate-approved budget:

• Instead of reducing Commercial Activity Tax rates and minimums by 25% across the board — as proposed in the original draft of the Senate Finance Committee’s plan — the budget approved by the full Senate provides about $700 million in CAT relief that would be limited to smaller companies.
  • The Senate’s budget would significantly narrow the CAT’s base, defeating the original purpose of the CAT — a more manufacturing-friendly tax that imposes a single low rate of 0.26% on business’ in-state gross receipts above $1 million. Under the Senate-approved language, it’s estimated that after two years, 90% of CAT filers would no longer be paying the tax, shifting the full burden to larger businesses, like manufacturers.
• The Senate-approved budget would expand the House’s personal income tax relief provision by providing nearly $1.5 billion in cuts over two years. This would be accomplished by reducing the number of income tax brackets from four to two, 2.75% and 3.5%. While Ohio would move closer to a flat tax, the brackets would no longer be indexed to inflation.
• The final Senate budget does not include the House’s bonus depreciation language.

The OMA Tax and Finance Committee is scheduled to meet again October 25. 6/15/2023