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The Ohio Department of Taxation released revised income tax withholding tables, effective with wages paid on and after January 1, 2020.The 2020 withholding tax filing deadlines have also been released. According to the Department's withholding website, other information on 2020 withholding requirements will be released soon.

As we reported previously, 2019 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.(EY Payroll Newsflash Vol. 20, #102, 7-26-2019.)

HB 166 also reduced tax rates for the remaining brackets by 4% for tax year 2019, lowering the top tax rate to 4.797%. Ohio's personal and dependent exemption amounts willnotbe adjusted for tax year 2019 and will remain the same as they were for tax year 2018.

As we reported, the Department chose not to release revised 2019 withholding tables. (EY Payroll Newsflash Vol. 20, #135, 9-6-2019.)

For more information on the legislation, see the Department's notice.

Supplemental withholding rate

The supplemental rate of withholding remains at 3.5% for 2020 under state regulations. (Ohio Administrative Code 5703-7-10, last revised November 23, 2018.)

Calendar year 2019 Forms W-2 filing requirements

As in the past, only employers filing 250 or more calendar year 2019 Forms W-2 and/or Forms 1099-R are required to submit Forms W-2 by January 31, 2020. The online system is now available for filing state Forms W-2, but not for Forms 1099-R, which must still be filed on CD.

Paper Form IT 3, Transmittal of Wage and Tax Statements, must accompany forms filed on CD. Form IT-3 need not be submitted when filing Forms W-2 online. Specifications for filing the 2019 Forms W-2 are available here.

Employers filing fewer than 250 Forms W-2 may voluntarily file Forms W-2 with the Department.

All employers are required to maintain copies of Forms W-2 and or 1099-R for a period of at least four years from the due date of the forms. If the information is not submitted to the Department, the Department may request W-2s or 1099-Rs periodically when conducting compliance programs.

All employers must electronically submit an annual reconciliation for calendar year 2019, Form IT 941, by January 31, 2020.

For more information on Ohio withholding, see the Department's website.

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EY Payroll News Flash