A provision of the recently enacted Ohio biennial budget bill (HB49) eliminates the bottom two income tax brackets, effective retroactively to January 1, 2017. As a result, income up to $10,500 will not be taxed.

The income tax brackets will be indexed each year by inflation.

No revision in income tax withholding tables for 2017

A senior representative of the Ohio Department of Taxation tells us that revised withholding tables will not be issued for calendar year 2017, but may be in the works for 2018. Affected taxpayers will pay any adjusted amount of tax on their 2017 state income tax returns. (Email response to inquiry.)

Supplemental income tax withholding

For 2017, the supplemental rate of withholding remains at 3.5%.

Changes to municipal reporting and payment

Beginning January 1, 2018, businesses will have the option of filing and paying municipal net profits tax through the Ohio Business Gateway. Once this option is elected, the business will continue with centralized tax reporting and payment unless opting to go back to decentralized reporting.

The bill also calls for the tax department to study the feasibility of allowing taxpayers to file municipal income tax returns through the joint federal and state modernized e-file program (MeF).

Municipalities are allowed to impose a penalty of not more than 50% on employers that are delinquent in the payment of municipal income tax withholding. Currently, state law requires that the penalty be equal to 50% of the unpaid municipal tax.

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