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Ohio Ends FY21 $1.54 Billion Ahead of Estimates

July 9, 2021

Ohio ended the fiscal year on June 30 with $1.54 billion (6.2%) more in tax revenue than originally forecast. Gongwer News reports that according to the Office of Budget and Management’s preliminary revenue tables, the state took in just under $26.5 billion in tax revenue over 12 months, compared to an estimate of $24.9 billion.

Compared to FY20, the state brought in $3.8 billion (17%) more in FY21.

State Budget Director Kimberly Murnieks said the variance could be attributed to a variety of factors, including soaring sales tax revenues. For the fiscal year, the sales-and-use tax beat estimates by more than $1 billion, or 9%, as the state collected nearly $12.2 billion in this category. 7/8/2021

Employee Retention Tax Credit Guidance

July 9, 2021

Employers continue to raise questions about the Employee Retention Tax Credit (ERTC), which offers a federal credit of up to $5,000 per employee. OMA Connections Partner Clark Schaefer Hackett has published this summary of the ERTC, which includes guidance on how your company can claim the credit. 7/6/2021

Understanding the Impact of Biden’s Tax Proposals

July 9, 2021

If approved by Congress, the Biden administration’s tax proposals would significantly impact individual, corporate, and international taxes. The administration’s proposed American Families Plan would raise taxes by an estimated $661 billion; the proposed Made in America Tax Plan would raise taxes by $2.3 trillion.

OMA Connections Partner Plante Moran has published this insight to highlight the administration’s key tax proposals and what might be coming next. 7/8/2021

Budget Contains Significant Personal Income Tax Relief

July 1, 2021

Republican House and Senate leaders reached a compromise in the new budget to provide a 3% across-the-board personal income tax cut. This relief will benefit small- and mid-sized employers that pay taxes on business income through an owner’s individual income taxes. Details include:

  • The top income tax bracket (4.797%) for high earners has been eliminated, reducing the number of brackets to four — compared to nine brackets six years ago.
  • Rates will be lowered for all income brackets.
  • The rate of the new top bracket — applicable to those earning more than $110,650 in 2021 — will fall from 4.413% to 3.99%.
  • Ohioans earning less than $25,000 will pay no state income tax.

The new budget is expected to result in nearly $1.7 billion in personal income tax relief over the biennium, while making Ohio more competitive. Senate Finance Committee Chair Matt Dolan (R-Chagrin Falls) noted that “only Indiana now is lower than us among surrounding states.” Senate President Matt Huffman (R-Lima) said he thinks the budget will deliver the largest personal income tax reduction in state history. 6/30/2021

Lawmakers Tweak Job Retention Tax Credit to Incentivize More Capital Investment

July 1, 2021

Ohio’s Fiscal Year 2022-23 budget makes modifications to the Job Retention Tax Credit (JRTC) with OMA-supported language that encourages more capital investment. The OMA was instrumental in changing the JRTC in the last budget to focus on manufacturers.

The changes in the new budget give the administration guidelines to use when vetting applications. An OMA task force worked with legislative staff to provide these criteria. 6/30/2021

CEOs Voice Concern Over Federal Tax Hikes

June 25, 2021

According to reports, a new survey by the Business Roundtable found 98% of CEOs said raising the federal corporate tax rate would have moderate to significant effect on their company’s competitiveness. Two-thirds of the executives said a tax hike could slow wage growth for employees. Similarly, Jay Timmons, president and CEO of the National Association of Manufacturers, says “increasing the tax burden on companies in America would mean fewer jobs, lower wages, and a smaller economy.” 6/22/2021

Webinar: Midyear Business Tax Planning

June 25, 2021

OMA Connections Partner Plante Moran will host a free webinar Tuesday, June 29 to provide a mid-year look at COVID-19-related tax changes that businesses should have on their radars. The firm’s experts will highlight tax opportunities and incentives that are currently available, while also providing an overview of tax proposals currently pending in Congress. 6/24/2021

Economic Round-Up: Inflation’s Impact

June 18, 2021

Inflation continues to make headlines. Here’s a summary of developments reported by Chad Moutray, chief economist of the National Association of Manufacturers:

  • Last month, the U.S. consumer price index rose 5% compared to a year ago — the largest jump since 2008.
  • Over the past 12 months, producer prices for final-demand goods and services have jumped by 6.5%, the largest increase on record.
  • Core producer prices have expanded by a record 5.3% since May 2020, with a gain of 4.3% since February 2020.

The Federal Reserve announced this week it will keep interest rates at zero to 25 basis points, adding that rising inflation is likely to be temporary. Moutray said “if cost pressures do not abate, the Federal Reserve and its stance of keeping rates near zero will be under pressure” and “the shift toward normalization could be sooner than now believed.” 6/16/2021

Tax Revenue Outlook Improves by $3B for Upcoming Biennium

June 18, 2021

Lawmakers negotiating the details of Ohio’s FY 2022-23 budget (House Bill 110) were told this week that the state’s revenue estimate for the next two years is $3.3 billion higher than previous forecasts. The development improves the odds that key OMA-supported provisions — such as repeal of the sales tax on employment services and workforce development priorities — will be included in the final budget.

Office of Budget and Management Director Kimberly Murnieks told lawmakers that despite the positive outlook — fueled largely by one-time federal spending — a significant portion of the surplus should be set aside as a “buffer” due to uncertainties moving forward. The OMA joined other major Ohio business groups in support of the DeWine administration’s call for fiscal restraint. 6/17/2021

R&D Tax Credit: Documenting the Process of Experimentation

June 18, 2021

This year marks four decades since the federal research and development (R&D) tax credit was codified in the Internal Revenue Code. OMA Connections Partner CliftonLarsonAllen has published this online guidance to help businesses navigate the complexity of the credit with tips on how to adequately document the process of experimentation involved in R&D projects. 6/16/2021