Ohio state taxes are some of the highest in the nation. But that all could change if a new proposed overhaul goes into effect.
Tax rates vary from state to state. Ohio happens to have one of the highest rates in the country with an effective state and local tax rate of 13.09%. In fact, only Illinois, Connecticut, Nebraska, New York, Rhode Island, and Wisconsin are higher.
A New Policy Matters Ohio proposal would seek to restructure the current state tax law. The goal is to provide relief to low and middle income families. The proposal is comprised of four main points.
Ohio State Tax Overhaul Proposal
1. Restoring a 7.5% income tax to residents earning more than $218,000 per year. This is currently the top income bracket and the current tax rat sits at just below 5%.
2. Create a new income bracket for earners making more than $500,000 year. Income over this level would be taxed at 8.5% according to the proposal. Due to Ohio’s graduated tax structure, this rate would only be applied to earnings over $500,000 and not to all earnings.
3. Repeal a loophole which was passed in 2013 that allowed owners of LLC’s to not pay taxes on their first $250,000 in profits. Anything above that amount is taxed at 3%.
4. Expand the Earned Income Tax Credit by removing its cap and making it refundable.
Will It Pass?
The proposal is so far just that. A proposal. No state legislator has been approached or signaled support. However, the gubernatorial campaigns are heating up for the 2018 election. There is hope among supporters that one or more candidates will give the proposal consideration.
Should It Pass?
Whether or not the proposal is a good idea is a matter of opinion regarding tax policy. However, there is no question that the focus would be on taxing high-income earners while providing relief to low and middle income residents.
Ohio state taxes are among the highest in the nation so any resident worried about their cost of living should take note.
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