Changes Made To DeWine’s Original Budget Proposal
On April 9, the Ohio House passed its version of the state’s operating budget (House Bill 96) for the next biennium, which begins July 1. Prior to passage, however, the House removed some key tax-related proposals Governor Mike DeWine included in his initial proposed budget earlier this year.
- An increase of $1.50 per pack on tobacco products.
- An increase in the sports gaming tax from 20% to 40%.
- A $1,000 child tax credit for parents of a child 7 years old and younger.
- An increase in the tax on recreational marijuana from 10% to 20%.
Tax Proposals Up For Senate Consideration
Even so, many tax provisions remain. Although many of them concern administrative or procedural details of state and local taxes rather than substantive reforms. The House did, however, include several notable tax proposals.
- Allow tiered pass-through entities and their owners to more effectively claim credit for elective pass-through entity tax. Under current law, tiered pass-through entities may need to pay the tax more than once to get the full federal tax benefit, and the state ultimately pays large refunds to the owners as a result.
- Require county budget commissions to reduce school district property tax levies if a school district’s operating budget carryover (i.e., cash balance) exceeds 30% of total expenditures from the prior fiscal year. The reduction would be the amount by which the carryover exceeds 30%.
- Allow a board of trustees of a community college to propose a tax levy for operating purposes. Under current law, such levies may only be used for purposes relating to the acquisition, construction, and improvement of land and buildings. The levy would apply in the county in which the college’s main campus is located. If approved, the college must charge a lower tuition rate to students who reside in the county.
The Bill’s Next Steps
Still missing from the budget is any rate reduction or substantive reform to the personal income tax, the commercial activity tax, and the sales tax. The spotlight now moves to the Senate, which will conduct hearings and pass its own bill later this spring.
GBQ will continue to monitor the next phase of the process and provide updates when warranted. If you have questions about how the budget will affect you and your business, reach out to your GBQ advisor or a member of the State and Local Tax team.
By John Petzinger and Matt Stamp, JD, LLM, State & Local Tax Services
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