The Ohio Senate continues to debate the state budget bill (HB 166), which includes several tax changes — both good and bad for manufacturers. The OMA encourages you to let your state senator know that Ohio’s number one industry is watching and will hold lawmakers accountable. We’ve made it easy to contact your senator. First, the good news on tax-related legislation.

• Language in the budget bill would exempt all manufacturers from sales and use tax on any supplies or janitorial services purchased to clean machinery in a manufacturing facility. This has long been an OMA Tax Committee priority. This provision would bring certainty to the current exemption law.
• Senate Finance Chairman Matt Dolan (R-Chagrin Falls) introduced a bill (SB 153) that would expand eligibility for the Job Retention Tax Credit. His proposal would be aimed at manufacturers, and would expand eligibility based on new capital investment — versus being tied to payroll or employee count.
• Another provision in the budget bill would create parity among all food manufacturers by allowing a sales-and-use tax exemption for equipment and supplies used to clean equipment that produces or processes food for human consumption. Currently the exemption is only for dairy food manufacturing.

Now the bad news.

• The House-passed budget bill would reduce the business income tax deduction for pass-through entities from the current $250,000 to $100,000, and remove the 3% flat tax rate for income over that threshold. The tax savings generated by the deduction have allowed Ohio manufacturers to reinvest in their operations by purchasing new equipment, expanding production lines, hiring new employees, and boosting wages.

Please contact Rob Brundrett with the OMA if you have questions or concerns about these or other tax issues. 5/30/2019