Lower tax withholding rates Take effect Sept. 1

Staff report

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The Ohio Department of Taxation issued an alert Monday to the state’s employers reminding them that lower state income-tax withholding rates take effect for payrolls ending on or after Sept. 1.

The new tax cuts come as one part of a tax-reform package in the state budget signed by Gov. John Kasich in June.

That budget reduces income-tax rates for Ohio workers by 8.5 percent in 2013, then by an additional half-percent in 2014 and an additional 1 percent the next year to yield a 10 percent tax cut by 2015.

The state budget also will cut small-business taxes by 50 percent and increase the sales tax by one-quarter percent.

In all, the tax-reform package is expected to cut Ohioans’ taxes by $2.7 billion over the next three years.

The lower withholding rates, the first such revision since 2009, means Ohio employers should deduct 9 percent less state tax from workers’ paychecks beginning Sept. 1.

The new rate, to be in effect through the end of 2014, incorporates the 8.5 percent tax cut for 2013 and the additional 0.5 percent cut in 2014.

Ohio workers will benefit from the income-tax cut through the withholding changes and fully capture the benefit for all of 2013 when they file their state tax returns next spring.

More information, including the new withholding tables and how-to instructions, is available on the Department of Taxation’s website at www.tax.ohio.gov.