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Ohio Taxes Reduced: Small Businesses & Flow Throughs

7/7/15

If you are an owner of a small business in Ohio, you just received a reduction in your personal income tax obligation! Good news also if you receive income allocated on a flow through basis, or if you are a 20% owner of a flow through and receive guaranteed payments.

The Ohio budget bill, effective June 30, 2015, reduces your Ohio tax liability for 2015 and provides even greater savings for 2016. The final version of the bill:

Business income not sourced to Ohio and nonbusiness income do not qualify for these reductions. However on all other income, the tax rate is reduced by 6.3%, effective for 2015.

It is all part of the "Blueprint for a New Ohio" broadening the tax base in some areas, such as collection of use taxes from out of state vendors, and providing incentives to keep and attract small businesses in Ohio, creating jobs, and modernizing Ohio's approach to funding its budget.

Sometimes a guaranteed payment to a less than 20% owner of a flow through can be restructured to qualify for this deduction. Let us know if you would like to explore this, other related planning opportunities or if you have questions regarding these changes. Please contact Gary M. Harden.

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