For the latest news and updates on Ohio state and local tax
March 19, 2024
Ohio Updates Sales and Use Tax Exemption for Feminine Hygiene Products
Authored by: Breea Boylan, CPA and Katie Nguyen, CPA
The Ohio Department of Taxation issued Information Release – ST 2024-01 providing additional guidance regarding the State’s sales and use tax exemption for feminine hygiene products. Effective April 1, 2020, feminine hygiene products were no longer taxable in Ohio. The information release clarified that items such as period underwear, period swimwear, period running shorts, and period sleep shorts that would otherwise meet the definition of clothing are also exempt if designed for feminine hygiene in connection with the human menstrual cycle.
For additional information, please refer to the Department’s Information Release.
If you have questions about sales tax exemptions, please reach out to a member of the Withum SALT Team.
February 27, 2024
Ohio Supreme Court Supports Constitutionality Of Ohio’s Temporary Law of Income Tax Payment to a Nonresident Municipality
Authored by: Brandon Mejia and Bonnie Susmano, JD, MBA
On February 14, 2024, the Supreme Court of Ohio held in Schaad v. Alder, Ohio S. Ct., Dkt. No. 2022-0316, that the General Assembly has the constitutional authority to enact a temporary state tax law directing an employee to pay income tax to the municipality of an employer rather than their location of residence. The taxpayer alleged that Section 29, a temporary state law enacted during the COVID-19 pandemic, violated the state and federal constitution since it authorized a municipality to tax income on nonresidents. However, the court affirmed that Section 29 did not violate due process and survived the rational-basis review in that Ohio had a legitimate interest in ensuring the stability of municipal revenues once previous workers in these municipalities received the stay-at-home order during the COVID-19 pandemic.
If you have questions about state and local “office of convenience” rules, please reach out to a member of the Withum SALT Team.
January 30, 2024
Ohio Commercial Activity Tax Updates
Authored by: Katie Nguyen, CPA and Jessie Racioppi
The Ohio Department of Taxation website announced significant changes to the Commercial Activity Tax (CAT) effective January 1, 2024. The announced changes include:
- The annual minimum CAT has been eliminated;
- The CAT exclusion for 2024 has been increased to $3 million (from $1 million); and,
- The CAT exclusion for 2025 increases to $6 million (from $3 million).
Taxpayers with less than $3 million of Ohio gross receipts in 2024 are no longer subject to the CAT and may file final returns on or before February 12, 2024, and cancel their accounts effective December 31, 2023. Taxpayers with less than $6 million of Ohio gross receipts in 2025 are no longer subject to the CAT and may file final returns on or before February 10, 2025, and cancel their accounts effective December 31, 2024. For additional information, please refer to the Department’s webpage:
If you have questions about whether your business is subject to state tax, please reach out to a member of the Withum SALT Team.
August 2, 2023
Ohio Increases Sports Gaming Receipts Tax Rate
Authored by: Jessie Racioppi and Jonathan Weinberg, JD, LLM, Principal
Effective July 1, 2023, the Ohio Sports Gaming Receipts Tax rate will increase from 10% to 20%. The tax rate will apply to all sports gaming receipts received on or after July 1, 2023, and will affect monthly returns beginning with the return due August 15, 2023. The reporting and filing requirements for both online and brick-and-mortar sports gaming remain the same.
If you have questions about gross receipts taxes, please reach out to a member of the Withum SALT Team.
August 2, 2023
Ohio Sales Tax Holiday
Authored by: Jessie Racioppi and Jonathan Weinberg, JD, LLM, Principal
On July 20, 2023, the Ohio Department of Taxation announced the state’s upcoming sales tax holiday. From August 4, 2023, to August 6, 2023, select “back-to-school” items will be exempt from sales tax. Items purchased to be used for a trade or business are not included in the sales tax holiday. The sales tax-exempt items include:
- Clothing costing $75 or less per item;
- School supplies costing $20 or less per item; and
- School instructional materials costing $20 or less per item.
If you have questions about Sales and Use Taxes, please reach out to the Withum SALT Team.
March 24, 2023
Ohio Updates IRC Conformity
Authored by: Brandon Mejia and Courtney Easterday
On March 15, 2023, Ohio Governor Mike DeWine signed SB 10 which updates the state’s tax conformity to changes made to the Internal Revenue Code by the Inflation Reduction Act of 2022 and Consolidated Appropriations Act of 2023. As such, Ohio now conforms to 2022 changes extending the limitation on excess businesses losses and excess farm losses and the 2023 changes affecting the tax treatment of retirement distributions and contributions.
As Ohio now conforms to the IRC, taxpayers and other entities are not required to make adjustments for federal conformity on their 2022 Ohio Tax Returns.
If you have questions about state/federal tax conformity, please reach out to a member of the Withum SALT Team.
June 28, 2022
Ohio Enacts SALT Deduction Cap Workaround
Ohio Governor Mike DeWine signed legislation on June 14, 2022, that counteracts the $10,000 state and local tax (“SALT”) deduction limitation created by the Tax Cuts and Jobs Act (“TCJA”). The new legislation creates an elective pass-through entity tax for qualified pass-through entities and provides the respective owners a refundable tax credit equal to the owner’s proportionate share of entity-level tax paid.
Qualifying pass-through entities, including S corporations, partnerships, or limited liability companies (treated as S corporations or partnerships for federal tax purposes), can elect to pay Ohio income taxes at the entity level beginning in 2022. As such, these taxes are treated as ordinary and necessary business expenses of the entity and thus are not subject to the $10,000 SALT limitation. Once the election is made, it is irrevocable. For calendar year taxpayers, the election will be filed on or before April 15th along with the original return or extension.
For calendar year 2022, the pass-through entity tax rate is 5% of the qualifying taxable income for the taxable year. For subsequent tax years, the tax rate is 3%. Additional guidance is expected to be released by Ohio in the coming months.
July 22, 2021
Tax Changes of Ohio Fiscal Year 2022-2023 Budget Bill
On June 30, 2021, Ohio Governor Mike DeWine signed the fiscal year 2022-23 budget bill. Below is a summary of tax changes included on the budget bill.
Personal Income Tax
- For tax years beginning in 2021, the number of tax brackets which impose tax on individuals’ nonbusiness income is reduced from five to four.
- Temporary COVID-19 withholding rules have been extended through December 31,2021 from July 18, 2021. This will allow employers to continue to withhold income tax based on an employee’s principal place of work rather than their at-home work location.
- A taxpayer must report to the tax commissioner a change in the amount of the taxpayer’s resident credit for income that is taxed in another state or the District of Columbia within 90 days.
- For taxable years beginning in 2026, an income tax deduction is allowed for taxpayers with capital gains from the sale of an ownership interest in a business equal to the lesser of the capital gain or a percentage of the business’s payroll over a specified period based on the taxpayer’s proportionate interest in the business.
Commercial Activity Tax
- The CAT minimum tax due on a taxpayer’s first $1M of receipts is now based on the prior year rather than current year gross receipts.
June 3, 2021
Ohio Provides Update on Federal Unemployment Benefits Deduction
The Ohio Department of Taxation has updated its guidance related to the federal deduction for unemployment benefits for tax year 2020. Ohio conforms to the federal treatment of unemployment compensation, including the exclusion of $10,200 of unemployment income under the American Rescue Plan Act of 2021 (ARPA,PL 117-2). For taxpayers who filed federal and Ohio tax returns without the unemployment benefits deduction and are now waiting for the Internal Revenue Service (IRS) to issue a refund, after the IRS makes the adjustment, the taxpayer is required to: (1) file an amended Ohio IT 1040 (and an amended SD 100 for those who reside in a traditional tax base school district) to report new federal adjusted gross income (AGI); (2) include a copy of the IRS Tax Account Transcript showing the new federal AGI; and (3) complete the Ohio Reasons and Explanation of Corrections form (Ohio form IT RE or SD RE). The Department emphasizes that taxpayers who are required to file an amended return with the IRS related to their unemployment benefits must wait to file their amended Ohio IT 1040 (and amended SD 100, if applicable) until after their federal amended return has been accepted by the IRS.
May 5, 2021
Ohio Updates COVID-19 Tax FAQs for Unemployment Billing Waiver
The Ohio tax commissioner is temporarily permitted to waive any interest, penalty, and/or interest penalty for the underpayment of state and school district income taxes due on unemployment compensation received in 2020, provided that certain requirements are met. In order to qualify for the waiver: (1) the taxpayer must have received unemployment benefits in 2020; (2) such benefit is included in the taxpayer’s Ohio adjusted gross income and/or the taxpayer’s traditional school district income tax base; (3) the taxpayer timely filed the Ohio IT 1040 (and SD 100 if applicable); (4) the taxpayer accrued interest, penalty, and/or interest penalty as a result of nonpayment or underpayment of the 2020 tax liability related to the taxpayer’s unemployment income; and (5) the taxpayer has paid the tax due for 2020 in full when requesting the waiver. Taxpayers who deduct all their unemployment benefits when filing their federal income tax return do not qualify for the waiver. For specific information, please see Ohio’s Covid-19 FAQ website.
April 28, 2021
Ohio to Have Brief Sales Tax Holiday in August
Ohio will offer a sales tax holiday during the period running from Friday, August 6, 2021 at 12:00AM to Sunday, August 8, 2021 at 11:59PM. During the holiday, the following items are exempt from sales and use tax: (i) an item of clothing priced at $75 or less; (ii) an item of school supplies priced at $20 or less; and (iii) an item of school instructional material priced at $20 or less. Items used in a trade or business will not exempt under the sales tax holiday. For more information regarding the sales tax holiday, please refer to the Ohio Department of Taxation’s Frequently Asked Questions (“FAQ”).
April 7, 2020
Ohio Conforms to IRC as of March 31, 2021
After passing recent legislation (see L. 2021, S18), Ohio is now in conformity with the Internal Revenue Code as of March 31, 2021. The Ohio Department of Taxation notes that taxpayers must remain mindful of any IRC provisions from which Ohio specifically decouples (a complete list of such decoupled IRC provisions can be found on Ohio Schedule A, Income Adjustments).
March 30, 2020
Ohio Update on Extension of Filing Deadline
Ohio Tax Commissioner Jeff McClain announced that Ohio will be following federal in extending the deadline to May 17, 2021 to file and pay Ohio individual income and school district income taxes for tax year 2020. Penalties and interest will be waived on payments made during the extension. The extension, however, does not apply to the first quarter estimated income tax payment for tax year 2021 which is still due by April 15, 2021. (News Release: Ohio Moving Income Tax Filing and Payment Deadline to May 17, Ohio Dep’t. Rev, 03/24/2021.)
March 21, 2020
Ohio February 2020 Sales and Use Tax Returns Due
The Ohio Department of Taxation reminds all sales and use tax taxpayers that the February 2020 monthly sales and use tax returns are due March 23, 2020. Taxpayers are required to file sales and use tax returns electronically via the Ohio Business Gateway at gateway.ohio.gov. Alternatively, taxpayers may file sales tax returns for county vendor’s licenses (vendor’s license numbers beginning 01-88) through TeleFile by calling (800) 697-0440. Learn more here.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
