Article originally posted 3/25/2021
Last updated 4/6/2021
Update: Governor DeWine signed S.B. 18 into law on March 31, 2021, as expected.
Overview
There were two major state tax developments in Ohio over the last week. First, on Wednesday, March 24, 2021, the Ohio House passed Senate Bill 18 (S.B. 18) in a 98-0 vote. S.B. 18 will bring the state of Ohio’s tax rules in line with federal rules by incorporating by reference parts of the Internal Revenue Code and other federal laws into Ohio tax law. The bill, which already passed the Senate and now awaits Governor Mike DeWine’s signature, also includes an emergency clause, which means that it becomes law immediately upon Governor Mike DeWine signing it. Second, Ohio has changed its deadline for when individual income taxes are due to match the new federal deadline of May 17, 2021. These topics are covered in more detail below.
Ohio Senate Bill 18
For businesses, Ohio S.B. 18, amongst other things, excludes certain loan amounts forgiven under federal law from the commercial activity tax, authorizes a commercial activity tax exclusion for Bureau of Workers’ Compensation dividends paid to employers in calendar years 2020 and 2021, and provides clarification on the tax treatment of Paycheck Protection Program loan forgiveness at the state level. It should be noted that the bill also includes special treatment for certain residential rental property, deductions for business meals, and reduces the pass-through entity tax withholding tax rate to 3 percent.
For individual taxpayers, S.B. 18 will, in part, increase the child and dependent care credit, provide tax breaks for student loan payments and eliminate taxes on the first $10,200 in unemployment compensation. S.B. 18 would also temporarily expand the amount of and eligibility for the Earned Income Tax Credit (EITC) and more.
Ohio’s Income Tax Deadline is Now May 17
In addition to the major tax changes mentioned previously, Ohio has changed its filing and payment deadline for when individual income taxes are due to match the new federal deadline of May 17, 2021. Ohio Tax Commissioner Jeff McClain announced the change Wednesday. The IRS had extended the federal deadline last week for personal income taxes. The extension applies to individual income taxes and school district income taxes for 2020. The state’s news release also said that, as with the IRS extension, Ohio will waive the penalty on tax due payments made during the extension. Note, however, that the first quarter estimated income tax payment for the tax year 2021 must still be made by April 15, 2021.
If there are additional comments or guidance on this matter, GBQ will provide updates as warranted. Please contact your GBQ representative if you have questions, or if you would like to discuss any of this information in further detail.
Article written by:
Kamal Qteishat
Intern, State & Local Tax Services
Sara Goldhardt
Director, State & Local Tax Services
