As you might except from 3,000 pages, there is a lot in Gov. John Kasich’s proposed budget (now House Bill 64). As an Ohio business, employer, and/or pro-business advocate, what do you need to know about the budget? Dan Navin, Vice President of Tax and Economic Policy, has the essentials on the budget below.

 

Highlights:

There is a hefty Personal Income Tax (PIT) reduction for owners of some small businesses that are pass-through entities (non-C corporations, i.e. S corporations, partnerships, LLCs, etc.).

Businesses would be subject to higher sales taxes, as well as higher commercial activity tax rates.

 

Tax Cuts

Personal Income Tax

• Cut by 23% by 2016—15% in 2015, followed by 8% in 2016.

Small business tax relief

• Owners of pass-through entities with less than $2 million in gross receipts would pay $0 in income tax on their individual share of the business profits

Personal exemption

• Increased by $1,800 to $4,000 for taxpayers with less than $40,000 in taxable income and increased by $950 to $2,850 for taxpayers with between $40,000 and $80,000 in taxable income.

 

Revenue Raising

Increasing the Commercial Activities Tax (CAT) rate on businesses

• $691 million over 2 years

Establishing a severance tax on horizontal oil and gas drilling

• $325 million over 2 years

Reducing used car sales tax exemption

• $216 million over 2 years

Increasing the sales tax rate

• $1.533 billion over 2 years

Extending sales tax to cable, parking , consulting, public relations, and other services

• $928 million over 2 years

Capping the vendor discount at $1000 per month of sales

• $62 million over 2 years

 

This week, the Ohio Chamber Taxation and Public Expenditures Committee will host Ohio Tax Commissioner Joseph W. Testa to learn more about the tax implications of the budget.