Issue link: https://viewer.e-digitaledition.com/i/196089
Ohio House bill 59 — Will Your Taxes Be Going Up or Down? by Diane m. burge, Cpa Y oU mAY BE pleasantly surprised when you file your 2013 Ohio Individual Income Tax return. Due to House Bill 59 (HB 59) signed into law June 30, 2013, personal income tax rates will be decreased by 8.5 percent for 2013; plus an additional 0.5 percent for 2014 and another 1 percent for 2015. New withholding tables were issued in September, so you may have already felt partial impact via an increase in your net paycheck. There is also a new 50 percent Small Business Income (SBI) Deduction. This is significant for those who report net business income on Federal 1040 Schedules C, E or F. In general, the Ohio deduction is 50 percent of Ohio small business income of up to $250,000, for a maximum deduction of $125,000. For married individuals filing separately, the deduction is limited to $62,500 each. Using 2013 tax rates, for a taxpayer in the highest marginal tax bracket, this change will save $6,776 in Ohio income tax. The SBI deduction impacts Ohio income tax only, and not the calculation of school district income tax. If your primary source of income is wages reported on a Form W-2, you still may be able to benefit from the SBI deduction if you moonlight and report income on Schedule C. Also, since both active and passive activities are included, profit from rental properties reported on Schedule E will qualify for the SBI. Those of you reporting pass-thru profits from an LLC, Partnership, or S corporation will also able to claim this deduction. You may be able to decrease your fourth-quarter Ohio estimated tax payment accordingly. The above positive changes to personal income tax are offset by other tax increases. State sales tax increased by 0.25 percent, and there is a new tiered minimum tax structure for Commercial Activity Tax (CAT). The CAT rate of 0.0026 and base tax of $150 for gross receipts of $1 million or less remain unchanged. However, there are new base taxes of $800 for gross receipts of $1 million to $2 million; $2,100 for $2 million to $4 million and $2,600 for $4 million and above. The CAT rate of 0.0026 will be imposed on gross receipts over $1 million in addition to the new base tax. HB 59 eliminates the state-funded 10 percent and 2.5 percent rollbacks property owners see on their county real estate tax bills. The pinch will not be felt immediately because it will be phased in as new levies are passed or old levies are renewed. Currently, an Ohio Homestead Exemption of $25,000 of the market value of an owner-occupied dwelling is available for disabled individuals or those above age 65. Effective for tax years 2014 and forward, only those with total income of less than $30,000 will qualify to apply for the Homestead Exemption. This will affect new applicants only so those who already have the Exemption in place will still receive this benefit. Creation of jobs and economic growth are the goal of the tax changes. More details and clarification will be forthcoming from The Ohio Department of Taxation. Diane Burge is a CPA and Principal of Weidrick Livesay & Company in Akron. ■ 3520 Longwood, Medina Ohio Exquisite throughout $1,175,000.00 Regran Leedy, Realtor, ABR 330-606-3507 cell 330-835-4900 office regranleedy@aol.com "The Physicians' Realtor" 130 N. Miller Rd, Akron OH 44333 www.RegranLeedy.com NovEmBEr /dECEmBEr ■ mdNEWS.Com ■ MD News Cleveland/Akron/Canton | 41