Ohio House takes up business tax fix bill

By Marc Kovac | September 17, 2015 at 12:00a.m.

COLUMBUS

The Ohio House began deliberations on fast-tracked legislation to ensure that small businesses’ tax bills for the year won’t be larger than originally anticipated.

HB 326 is identical to SB 208, which had its first hearing in the Ohio Senate last week and which is poised for passage by that chamber before the end of the month.

The House version had its first hearing Wednesday before the chamber’s Ways and Means Committee, with sponsor testimony from Rep. Ron Amstutz, R-Wooster, and state Tax Director Joe Testa.

As part of the biennial 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.

HB 326 and SB 208 would fix the issue by clarifying the 3 percent rate is for business income of more than $250,000.

“To achieve the intended reduction for the 2015 tax year, we need to apply the nonbusiness bracket rates to the 25 percent of business income not eligible for the credit to avoid situations where the 3 percent tax rate would produce a tax increase,” Amstutz said. “I believe this situation goes away in 2016 and beyond.”

A second hearing on HB 326 is planned for next week, with the chamber poised to take up the Senate version in coming weeks.