Ohio Tax Law Changes

Governor Mike DeWine recently signed HB 33, Ohio’s biennial budget legislation, which enacts several changes to Ohio’s tax laws. This article discusses some of the more significant changes.

Commercial Activity Tax (CAT)

The CAT exclusion amount increases from $1 million to $3 million for tax periods beginning in 2024. For 2025 tax periods, the exclusion increases to $6 million. Tax filings will still be required for taxpayers with more than $150,000 in gross receipts.

Individual Income Tax Rates

The personal income tax rates are reduced in 2023 and 2024, with a maximum 2023 rate of 3.75% and a maximum rate of 3.5% in 2024.

                OHIO TAXABLE INCOME                          TAX RATE

                      2023

                     $26,050—$92,150                                      2.75%

                     $92,150—$115,300                                  3.688%

                     More than $115,300                                   3.75%

                     2024

                     $26,050—$92,150                                      2.75%

                     More than $92,150                                       3.5%

Special Individual Income Tax Deduction

HB 33 allows an income tax deduction for payments received by the taxpayer as a result of the February 3, 2023, train derailment in East Palestine, Ohio.

Pass-through Entity Tax

HB 33 expands the resident tax credit for entity-level taxes paid to other states. Changes apply to tax years ending on or after January 31, 2023; however, taxpayers may elect to apply the changes to tax years ending on or after January 1, 2022, by filing an amended or original return for that year.

Municipal Tax Net Profits Apportionment

For tax years ending on or after December 31, 2023, businesses with remote workers can elect to apportion payroll, property and sales to designated reporting locations (instead of the remote worker’s location). The withholding requirements do not change, but this allows companies to apportion remote employees under a special apportionment.

Please note that this information is general in nature and is not intended as legal, accounting or tax advice. Be aware that the information may not be applicable to your circumstances. Contact your SSB tax professional if you have questions or would like to learn more.