House Bill 5 victory
After several years of testimony, interested party meetings and compromises from both proponents and opponents of the bill, House Bill 5 was signed into law by Gov. Kasich December 19, 2014 with most provisions taking effect January 1, 2016. Read more here.
The following reforms will positively impact Ohio businesses and improve our state’s tax and business climate:
- Centralized collection of net profit taxes through the Ohio Business Gateway
- Reduced Ohio’s income tax brackets from 9 to 7
- No increase in the Commercial Activity Tax rate for Ohio businesses
- Defeated the originally proposed sales tax rate increase and base expansion to other services
- Eliminated the municipal throwback rule
Why was HB 5 critical for Ohio?
- Ohio still has the most complicated local income tax system in the U.S. It's one of just a few states that tax both individuals and businesses and the only state where each city/village makes its own rules and regulations.
- Businesses must keep track of and comply with as many as 600 different sets of tax ordinances. It’s particularly burdensome for businesses whose employees work/travel in multiple cities.
- Compliance often costs businesses more than they owe in tax. The high cost of complying hinders economic growth.
How does HB5 benefit Ohio?
- Ohio’s municipal income tax system is simpler, fairer and more predictable. Taxpayers and businesses will better understand municipal tax laws and it will be easier for them to comply with the rules and support the economies of their local communities.
- Businesses pay less to comply with municipal tax rules. This frees up capital and time to reinvest and grow their companies.
- Ohio will be more attractive for out-of-state employers. Ohio will no longer stand out as the worst state in the nation in terms of municipal tax requirements.
Read a Summary of Key Provisions.
MYTH: The coalition was not willing to compromise with municipalities.
FACT: The coalition held many meetings with interested stakeholders including city and village representatives over the course of several years. House Bill 5 specifically addresses many of the concerns voiced by cities and villages across Ohio.
MYTH : The Coalition wants to change the credit percentage (a.k.a. reciprocity) a resident city gives its residents for the municipal income tax paid by those residents to the citypaid in the city where they work
FACT: The Coalition made it clear the issue of reciprocity was a matter between a city and its residents and therefore is not a part of its municipal tax reform agenda.