The Ohio Senate on Wednesday approved one-year expansions of state income and small-business tax cuts, as well as raising tax credits and exemptions for poorer Ohioans.
The Republican-sponsored measures in House Bill 483, which passed the Senate, 24-8, come as a result of higher revenues and lower state spending than expected.
Under the revised budget review bill, a 9-percent income tax cut previously approved for this year would be increased to a 10-percent cut. The move would save taxpayers an additional $94 million this year, according to state Sen. Scott Oelslager, a North Canton Republican.
Another change would give businesses making $250,000 or less a 75-percent business tax deduction for 2014, up from a 50-percent deduction in current law. That would mean $225 million in savings, Oelslager said.
An estimated 717,000 business owners and investors would be eligible for the increased cut, according to the Ohio Department of Taxation.
The Senate kept some parts of Gov. John Kasich’s tax plan for low-income residents, including doubling Ohio’s Earned Income Tax Credit from 5 percent to 10 percent of the federal credit. The revised bill would also increase the personal exemption for taxpayers making up to $80,000 per year.
The tax changes were made possible because, during the first four months of 2014, state revenues were $310 million higher than projected and state spending was $848 million less than anticipated.
Kasich administration spokesman Rob Nichols said the tax relief provisions included in the bill were “low-hanging fruit items” that could be put into place right away.
“We’re glad we got those through – we agree with them,” Nichols said.
Nichols said that Kasich’s proposed 8.5-percent across-the-board income-tax cut, which would be paid for by commercial activity, oil and gas, and tobacco tax hikes, is “still on the table” and will “be part of the longer discussion.”
The Ohio House must still approve the Senate’s changes before the bill would head to Kasich’s desk.
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