General Assembly clarifies small-business tax

October 22, 2015 at 12:00a.m.

COLUMBUS

The Ohio General Assembly worked Wednesday on Senate Bill 208 to clarify tax cuts enacted as part of the biennial budget bill to ensure that small businesses will not face a higher-than-expected tax bill this year.

As part of the budget, lawmakers and Gov. John Kasich instituted a phase-out of taxes on small-business income up to $250,000, with a 75 percent exemption allowed during the current tax year and 100 percent in 2016.

The legislation also calls for a flat 3 percent tax on business income of more than $250,000.

But the way the latter was written into law potentially poses a problem for some small businesses, which could end up having a bigger tax bill under the flat 3 percent rate this year.

SB 208 still would provide the 75 percent exemption on the first $250,000 of small- business income for the current tax year but would clarify that the other 25 percent would be taxed using the current graduated tax rates, with a 3 percent cap.

“This clarifying language ensures that Ohio’s businesses will receive the full tax relief intended,” said Sen. Bill Beagle, R-Tipp City. “With these funds, businesses will be able to create more jobs, invest in expansions and continue to be competitive in the global marketplace.”