COLUMBUS — The income-tax cut approved in the recently enacted $62 billion, two-year budget is about to show up in Ohioans’ paychecks.
The cut was retroactive to the start of this calendar year, but the Department of Taxation has alerted employers to start reducing withholding rates by 9 percent to reflect the change beginning as soon as Sept. 1.
As part of a broader tax reform package, the budget cuts individual income tax rates by 10 percent over three years—8.5 percent this year, 9 percent in 2014, and 10 percent in 2015.
“The sooner these lower tax rates are applied, the sooner Ohio workers will see the dollars-and-cents benefit of this tax cut,” said Tax Commissioner Joe Testa. “Most Ohio workers should receive fatter paychecks when the new withholding rates go into effect, but only if their employers apply the new rates at their first opportunity.”
Among other things, the budget cut income taxes paid by small businesses by 50 percent on the first $250,000 in profits and raised the state sales tax rate a quarter of a penny to 5.75 cents on the dollar. With the local piggyback sales tax, the rate will be 7 percent in Lucas County.
The overall package is expected to result in a net tax cut of $2.7 billion over three years, but how much individuals benefit will depend on how much they earn and spend.