According to representatives of the Ohio Department of Taxation, although recently enacted HB 166 reduces state income tax rates retroactively to January 1, 2019, there currently is no plan to issue revised 2019 withholding tax tables. Employers should continue to use the 2019 withholding tables issued in December 2018 until further notice. (Telephone conversation and email response to inquiry, Ohio Department of Taxation, August 2019; EY Payroll Newsflash Vol. 19, #211, 12-20-2018.)

Bill details

As we reported, Amended Substitute House Bill 166 (HB 166), eliminates the bottom two individual income tax brackets reducing the number of brackets from seven to five, effective January 1, 2019. The elimination of the bottom two brackets effectively exempts from Ohio individual income tax any individual with annual income of $21,750 or less. The indexing of brackets and exemptions is frozen for tax years 2019 and 2020 at 2018 levels with indexing resuming in tax year 2021.

HB 166 also reduces tax rates for the remaining brackets by 4% for tax year 2019, reducing the top tax rate to 4.797%. Ohio's personal and dependent exemption amounts will not be adjusted for tax year 2019 and will remain the same as they were for tax year 2018.

For more information on the legislation, see EY Payroll Newsflash Vol. 20, #102, 7-26-2019, and the Department's notice.

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EY Payroll News Flash