Tax Climate
A NEW, MORE COMPETITIVE TAX ENVIRONMENT
Ohio has substantially altered its tax code, creating a tax environment designed to attract companies that sell their goods or services outside of Ohio. Here in Ohio:
- We no longer charge a personal property tax machinery & equipment, inventory, furniture & fixtures.
- We no longer have a corporate franchise tax on net income or net worth.
- Personal income taxes have been reduced by 16%.
- A broader based, low-rate Commercial Activity Tax has been created to offset eliminated taxes. The Commercial Activity Tax is a tax on .26% ($2.60 per $1,000) of gross receipts above $1 million INSIDE of Ohio. Companies with sales inside of Ohio less than $1 million pay $150. Companies with sales in Ohio less than $150,000 are exempt. Sales OUTSIDE of Ohio are exempt from Taxation.
The result is that Ohio has the lowest tax on new capital investments in the Midwest.
Source: Ohio Business Development Coalition http://www.ohiomeansbusiness.com/
How does Ohio's state tax burden compare with other nearby states?
NOTES
1. Data Source(s): Ohio Department of Development; State of Ohio Department of taxation, Commerce Clearing House, Federation of Tax Administrators, and each state's Department of Taxation / Revenue.
2. Examples only consider direct state business taxes. The examples do not reflect the application of various local business taxes (i.e., real and personal property tax, local business tax) as well as local service charges and user fees.
3. Case #1: Total sales (i.e., net gross receipts) of $1,000,000; Expected profit margin of 5.0%, with 100% of sales in-state. Purchase of $500,000 in personal property (required for State of Michigan tax calculations).
4. Case #2: Total sales (i.e., net gross receipts) of $5,000,000; Expected profit margin of 5.0%, with 50% of sales in-state and 50% of sales to out-of-state customers; Purchase of $1,500,000 in personal property (required for State of Michigan tax calculations. In addition, the State of Ohio Revised Code Section 5751.01 requires the commercial activity tax is paid by all businesses that either:
- Have at least $500,000 in taxable gross receipts in Ohio, or;
- Have at least $50,000 in property in Ohio, or;
- Expend at least $50,000 in payroll for work in Ohio, or;
- Have at least 25% of their total property, payroll, or gross receipts in Ohio, or;
- Are domiciled in Ohio.
Learn more at www.ohiomeansbusiness.com