Tuesday, January 21, 2014

Ohio Seeks to Reform Municipal Income Tax


The end of 2013 saw big changes in the Buckeye State as the Ohio House of Representatives passed Ohio House Bill 5. This legislation seeks to reform the municipal income tax system currently in place in Ohio.

In Ohio, municipalities, meaning cities and villages, are authorized to impose local income taxes on their residents and nonresidents who work there. The municipality that imposes the income tax is responsible for administering the tax.

If the bill passes it will mean big changes as it will standardize definitions for all municipalities and establish a 20-day withholding threshold for nonresident employees. The legislation has strong support from the Ohio Society of CPAs, but faces stiff opposition from the Ohio Municipal League, who argue that the bill will result in revenue loss for the municipalities.

The bill is currently in the Senate and is expected to pass by the end of 2014. Continue to check back with PayState Update and Pay News Now as the bill progresses.