Ohio House votes out $88B state budget bill, OSCPA sees movement on key issues impacting accounting

OSCPA staff report

The Ohio House in late April passed House Bill 33, Ohio’s massive biennial budget legislation for fiscal years 2024-2025, by a wide margin, officially sending the bill to the Senate.

Included in the bill are several OSCPA priorities such as conforming state to federal law on bonus depreciation, as well as provisions targeting improving Ohio’s workforce priorities.

A top priority of the House was to keep chipping away at Ohio’s personal income tax rates and brackets in the budget bill. While their goal of a flat tax rate was not achieved, House leaders did eliminate another tax bracket, cutting costs for low- and middle-class Ohioans. In the bill’s current form, the revised budget bill would keep the level at which Ohioans would not pay any income tax up to their first $26,050 of income. It also would eliminate a middle-class tax bracket, with the result that lower- and middle-income Ohioans making up to $92,150 per year would pay the same reduced income tax rate – 2.75%. The House didn’t change the top two rates.

Numerous Senate hearings will take place on this 4,600page bill chock full of funding and public policy issues. Per the Ohio Constitution, the final budget bill must be signed into law by Gov. DeWine before July 1.

While the budget bill continues to progress through the Ohio legislature, OSCPA made its presence known at the Ohio Statehouse this spring.

Deduction of Bonus Depreciation and Expensing Allowances. House Bill 116 seeks to amend R.C. 5747.01 to allow taxpayers to deduct in a single year the full bonus depreciation and enhanced expensing allowances the taxpayer deducts for federal income tax purposes. The bill creates an election allowing taxpayers to eliminate the addback and phase out subtraction. The sponsors are State Rep. Bob Peterson (R-Washington Court House) and State Rep. Thad Claggett (R-Newark). OSCPA provided proponent testimony in favor of H.B. 116 on April 18. H.B. 116 was amended into H.B. 33 (the budget bill) prior to passing the Ohio House.

Municipal Notices and Late Filing Fees. House Bill 105 places limits on late filing notices and penalties. H.B. 105 is sponsored by State Rep. Jim Thomas (R-Jackson Twp.), and OSCPA provided proponent testimony in favor of H.B. 105 on March 28. H.B. 105 was amended into H.B. 33 (the budget bill) prior to passing the Ohio House, along with another OSCPA priority that would extend the due date for filing municipal net profits tax returns from Oct. 15 to Nov. 15.

Municipal Net Profits Tax Safe Harbor. House Bill 121 allows businesses with remote and hybrid employees or owners to use a modified apportionment formula if they choose to make the election. The bill is sponsored by State Rep. Monica Robb Blasdel (R-Columbiana) and State Rep. Adam Mathews (R-Lebanon). In proponent testimony on April 25, Greg Saul, CAE, Esq., OSCPA director of tax policy said this “relieves the administrative burden for many taxpayers” by situsing the net profits to the remote worker’s regular reporting location at the employer’s place of business.

BID and Guaranteed Payments. House Bill 138 classifies certain pass-through entity payments as business income. Its sponsors are State Rep. Angie King (R-Celina) and State Rep. Tom Young (R-Washington Twp.). OSCPA offered proponent testimony on May 2. It would classify guaranteed payments paid to pass-through entity (PTE) investors, regardless of their ownership interest, as “business income” and therefore eligible for the business income deduction and flat income tax rate. Currently, ODT only treats guaranteed payments received by 20% or more owners as business income.

Please be sure to keep following the OSCPA Advocacy webpage for more updates.