The Ohio House and Senate passed two different - and conflicting - budget bills prior to the June 30th deadline. A major point of contention between the bills was the treatment of Ohio’s Business Income Deduction (BID).The Senate’s version of the budget kept the cap for BID at $250,000 while the House wanted to cap BID at $100,000. The compromise reached by the bodies keeps the cap at $250,000 and maintains the 3% flat rate tax on income above $250,000.
During the deliberations to reconciling the two bills, there was discussion of tying BID to Section 199A of the U.S. Tax Code. This would have had a negative impact on a broad array of Specified Service Trades and Businesses (SSTB.) The compromised budget does not tie BID to 199A, thus saving SSTB, which make a significant contribution to Ohio’s economy. The one change is lawyers and lobbyists will no longer qualify for BID.
The budget, which Governor DeWine signed into law yesterday, institutes an across-the-board tax cut of 4%, which was scaled down from the previous House and Senate versions of the bill (at 6.6% and 8% respectively.)
If you have questions about how the new budget will affect you or you would like help with planning for the new tax rates, contact one of our Zinner tax professionals.