The Ohio House of Representatives on Wednesday passed legislation to overhaul the state’s municipal income tax system.
House Bill 5, aimed at standardizing and streamlining parts of the state’s patchwork system of 300 or so different local tax forms, was approved by a 56-39 vote. The legislation heads to the Ohio Senate for consideration.
Business groups have pushed for the changes, saying it’s often confusing and costly for companies who do work in multiple cities to comply with all the different income tax forms, deadlines and rules.
However, municipalities say the changes would slash revenue to many local governments at a time when they’re already reeling from state funding cuts and the end of the tangible personal property tax and estate tax.
Under the bill, businesses with an annual income of $500,000 or less would only be charged municipal income tax in the area they’re located in.
In addition, workers on a job in a different city wouldn’t have to start paying income tax in that municipality during their first 20 days there. Under current law, the threshold is 12 days, after which employees are charged for every day they did work in the city.
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