Tax Changes As Part Of The Ohio Budget Bill For Fiscal Year 2022-2023 | Dickinson wright

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Ohio Governor Mike DeWine recently signed the Fiscal Year 2022-2023 Budget Bill, which contains several tax provisions and changes that will affect businesses and their owners. The general date of entry into force of the bill is 91st day after being filed with the Ohio Secretary of State. Some of the highlights of the bill are as follows:

  • An income tax deduction for investors in Ohio-based Certified Venture Capital Operating Companies (“VCOCs”). The deduction will be 100% of the capital gain received by the taxpayer-investor in the tax year attributable to a VCOC’s investment in Ohio businesses and 50% of the capital gain received. an investment of a VCOC in all other companies. The deduction will be available for tax years beginning in 2026.
  • A sales and use tax exemption for employment services and placement services, which is to come into effect one month after the general effective date of the legislation.
  • A requirement that taxpayers use their previous year’s gross taxable revenue, rather than the current year’s gross revenue, to calculate the Business Activities Tax (“CAT”) due on their first million dollars in gross receipts.
  • In calculating the CAT, taxpayers can exclude from gross revenue any excess State Insurance Fund received by the taxpayer from the Ohio Workers’ Compensation Office. The exclusion is expected to come into effect in the 2022 tax year, continuing and making permanent the temporary exclusion currently in effect for the 2020 and 2021 tax years.
  • An income tax deduction for certain eligible taxpayers for a capital gain attributable to the sale of an interest in a business, capped at the lesser of the capital gain from the sale or an amount calculated from the the company’s payroll over a certain period. The deduction is expected to come into effect for tax years beginning in 2026.
  • For tax years beginning on or after January 1, 2021, taxpayers are no longer required to report each business or professional activity from which their business income was derived when claiming the business income deduction.

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