Tax Changes as Part of the Ohio Draft Budget for Fiscal Year 2022-23
July 19, 2021
Dickinson Wright PLLC
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Ohio Governor Mike DeWine recently signed the Draft Budget for Fiscal Year 2022-23, which includes several tax regulations and changes that will affect businesses and their owners. The bill’s general entry into force is the 91st day after filing with the Ohio Secretary of State. Some of the highlights of the bill are as follows:
- An income tax deduction for investors in certified Ohio-based venture capital companies (“VCOC”). The deduction is 100% of the capital gain the taxable investor receives during the tax year attributable to a VCOC investing in Ohio companies and 50% of the capital gain derived from a VCOC investing in all other companies. The deduction is possible for tax years from 2026.
- A sales and use tax exemption for employment and placement services, due to come into effect in the month after the law comes into general effect.
- A requirement that taxpayers use prior year gross taxable income instead of current year gross income to calculate business tax (“CAT”) owed on their first $ 1 million in gross income.
- In calculating the CAT, taxpayers can exclude from gross receipts any excess state insurance fund surplus that the taxpayer receives from the Ohio Bureau of Workers’ Compensation. The exclusion should come into force in the tax year 2022 and continue the provisional exclusion for the tax years 2020 and 2021 and make it permanent.
- An income tax deduction for certain qualified taxpayers on capital gains attributable to the sale of an interest in a company, limited to the lower of the value of the capital gain on the sale or an amount calculated from the company’s payroll during a specified period of time . The deduction should come into effect for tax years from 2026.
- For tax years beginning on or after January 1st, 2021, it is no longer necessary for the taxpayer to state every commercial or professional activity from which his operating income originates when claiming the operating income deduction.
The content of this article is intended to provide general guidance on the subject. You should seek expert advice regarding your specific circumstances.
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