Ohio’s “small business” tax break cost the state about $943 million in taxdollars in 2015, according to the Ohio Department of Taxation. That’s nearly $400 million more than estimated.
That year, 605,890 taxpayers claimed the business income deduction for income earned from sole proprietorships, partnerships, limited liability corporations and s-corporations.
The cost for the tax break in 2016 will likely be higher because lawmakers increased the amount of pass-through business income eligible for the exemption — from 75 percent of income up to $250,000 to all income up to $250,000.
The department had estimated the tax break at about $600 million a year, when fully phased in. Lawmakers have referred to the $600 million figure while debating the state’s two-year budget bill.
But that amount didn’t include an additional tax reduction lawmakers gave to filers claiming more than $250,000 in business income, from a 4.9 percent rate to 3 percent. A Department of Taxation spokesman said that revenue loss was included in budget estimates for total state income tax revenue.
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