Ohio Gov. John Kasich has signed legislation that will create a more unified municipal income tax system for Ohio by requiring municipal corporations levying an income tax as of January 1, 2016  to amend their existing income tax ordinances to comply with the limitations set out in the legislation.

The legislation generally establishes a uniform tax base by defining the forms of income that municipal corporations may tax and the forms that they may not tax.

The legislation also sets up various statewide standards that local governments have to follow, including:

  • businesses with an annual income of $500,000 or less will be charged municipal income tax only in the area where they are located
  • workers on a job in a different city will not have to start paying income tax in that municipality during their first 20 days (currently 12) there
  • under a phase-in plan starting in 2016, companies will be able to carry forward NOLs for five years to offset taxes on future profits
  • modifications and further specifies on how the sales and payroll factors will be computed in the apportionment formula for taxpayers that have income from both within and outside a municipal corporation
  • an income tax employer withholding schedule for all municipal corporations that depends on recent withholding amounts and requires all municipal corporations levying an income tax to comply with a uniform annual tax return filing schedule, with some exceptions

We will send out more information as it becomes available.