On Sunday June 30, the Governor signed HB 59, the state’s two year $62 billion budget. Included in the budget bill was language that eliminated the CAT from gasoline and diesel sold for over the road use and created a new excise “Rack Tax” effective on July 1,2014 at a rate of 0.65% on gross receipts at the Rack. If the new tax is 10% lower or higher than expected the Tax Department can make adjustments. The reason for the July 1, 2014, date is so the Tax Department can establish rules and inform all interested parties of the changes. The Department also made it clear that this is an excise tax and as such can be shown on the invoice and included in price at the pump. If you have further questions on this new tax please contact MIRA. This is the culmination of over 7 years work trying to change this tax and level the playing field at the pump for all. This is what hard work and a great association can do when it sets its mind to it and you should encourage all those not members to join and make MIRA one of the strongest associations in Ohio.
In addition to the CAT change there we’re other significant changes in the bill. It reduces all income-tax brackets by 8.5% this year, 9% next year and then 10% in 2015 and beyond. Temporarily freezes tax brackets and personal exemptions so they no longer rise with inflation. Puts in place a nonrefundable earned income tax credit. For business owners who operate as pass-through entities, profits are their income, which is taxed as other income in Ohio. The bill would provide a 50% tax deduction on up to $250,000.00 worth of business income. There is a maximum of $7000.00 per year. For all items still subject to the CAT you would no longer get a $2,450.00 credit on the first $1 million in sales for all businesses. The state currently pays 12.5% of your local property-tax bill. All current levies and renewal levies would still get the 12.5% but any new levies or replacement levies would cost property owners more as the 12.5% would not apply. Seniors age 65 and over currently get a homestead exemption shielding $25,000.00 from the appraised value of the home from taxes. The bill would require anyone in the future to be subject to a means test of $30,000.00 or more in income and they would not qualify for homestead exemption. The bill does grandfather in current seniors eligible for the exemption.
Lastly the bill increases the Sales tax from current 5.5% to 5.75% and eliminates exemptions for magazines and digital products such as downloaded books. Under HB59 Ohio also becomes a member of the multistate compact in which out-of-state companies volunteer to remit sales taxes on internet purchases by Ohioans.
The net result of these changes is a $2.6 billion dollar plus for Ohio Tax payers. By cutting the income-tax and partially paying for those cuts with slight increases the Governor believes he has created a pro-business climate in Ohio.
On other matters MIRA has joined a coalition group in opposition to renewing the sin taxes in Cleveland. More on that later. MIRA will also be meeting with the Ohio EPA on developing permanent rules on replacement of Stage II Vapor Recovery systems in Ohio.