New tax cuts will come in handy for Ohio business owners and the legislators who made those tax cuts possible.
On June 30, 2021, Governor Mike DeWine signed into law the Ohio Biennial Budget Bill. The two-year spending plan has a number of features including tax cuts to the tune of $1.7 billion.
With a Republican-controlled House and Senate, the plan provides a number of features including:
- The plan changes the formula for funding of K-12 public schools. Instead of relying on a statewide average of cost per child of education, the state will consider local property values and incomes for determining how much each community can pay to support its public schools.
- Funding was boosted to law enforcement agencies including $8 million for gunshot detection technology and officer body cameras. Funding for broadband internet access was also included in the bill as well as a provision for college athletes to profit from their brand (without endorsements for casinos, adult entertainment, tobacco, or alcohol).
- A big feature of the new budget is tax savings. Tax rates were lowered across the board. For the bottom 80 percent of taxpayers making less than $107,000, the tax cut will look about like $43 a year. For those earning between $42,000 and $65,000, the tax cut should be about $49 a year. The minimum threshold amount for filing taxes was raised to approximately $25,000.
- The tax cuts provide the most savings for the wealthiest wage earners. Lawmakers removed the highest income bracket that applied to those earning more than $220,300 each year. This means that a taxpayer earning approximately $110,650 will pay the same taxes as a taxpayer earning $220,000 and above. The reverse is true as well--higher earners will now pay tax rates applicable to those earning approximately half their income. For the highest earners, elimination of the top tax bracket should offer savings of approximately $2,200 per year. Some lawmakers, like Senator Bill Reineke, will save approximately $4,900 from tax cuts fashioned by he and his colleagues.
- The Ohio Tax Expenditure Review Committee (TERC), created in 2016 to review tax expenditures and tax cuts such as those in the current spending bill, was eliminated.
Senator Kristina Roegner, who earns roughly $207,000, emphasized the importance of cutting state spending. She noted from the floor, “The only way we can cut spending is to starve the beast. To starve the beast, we have to cut taxes. And that’s what this budget does, and we do a really good job of that in this budget.”
After signing the package, Governor DeWine remarked, "What you invest in is what you value. This budget reflects what we value." For high asset individuals and lawmakers in Ohio, the tax savings in this budget plan provide significant value.
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From offices in Chicago and Cleveland, the tax attorneys at Robert J. Fedor, Esq., LLC offer experienced tax advice locally and abroad. If you are involved in tax litigation or have an upcoming IRS civil or criminal audit, call 800-579-0997 or contact us today for a free consultation.
