State lawmakers approved changes Wednesday to Ohio’s income tax rates that move a reduction planned for next year to this year.
Legislators also bolstered a tax deduction available to small businesses with income that is reported on individual tax returns. And they doubled the size of the Earned Income Tax Credit available to Ohioans with lower incomes and the personal exemptions for other taxpayers.
A conference committee on Monday ironed out differences between bills passed by the House and the Senate. Both chambers voted Wednesday to accept the committee’s report.
The bill now goes to the governor for signing. The administration already has said it supports the legislation.
The bill accelerates an income tax cut passed last year so all Ohioans will see a 10 percent reduction in their tax rate instead of the planned 9 percent. The bill also increases for 2014 only the amount of income that small businesses and pass-through entities can deduct from state income tax from 50 percent to 75 percent of income up to $250,000.
Just how big a deduction will be allowed will depend on actual surplus revenue determined at the end of this month. The package is estimated to cost about $400 million. The Ohio Department of Taxation estimates 717,000 business owners and investors would be eligible for the increased deduction.
The Earned Income Tax Credit was increased from 5 percent to 10 percent of the federal credit. Changes to size of the state’s personal income tax exemption will affect taxpayers making up to $80,000 per year.
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