Ohio Senate leadership this week unveiled its version of the state budget (House Bill 110). The $75 billion, two-year budget bill includes provisions that would eliminate Ohio’s sales tax on employment services used by businesses to hire temporary or permanent workers — saving Ohio employers an estimated $303 million over the biennium. It also includes a 5% across-the-board personal income tax cut, worth an estimated $874 million. The elimination of the employment services tax has been a longtime priority for Ohio manufacturers. (Read the OMA’s comments on the budget’s tax relief measures.) Overall, the Senate budget includes roughly $1.3 billion in tax cuts. (This budget comparison document shows all the changes made by the Senate thus far.) Other key tax-related provisions include:

• An extension through the end of 2021 of Ohio’s temporary law that allows municipal income tax withholdings to be based on an employee’s principal work location, not where he/she is working remotely during COVID-19. (This gives employers needed certainty.)
• Modifications to the Job Retention Tax Credit with OMA-supported language that encourages more capital investment in Ohio.
• A permanent Commercial Activity Tax exemption for BWC dividends paid to employers. (This exemption was included in Senate Bill 18, signed into law earlier this year, but it only applies to dividends paid in 2020 and 2021.)

Once the full Senate passes its version of the budget — expected to occur next week — House and Senate leaders, along with the governor, have until June 30 to iron out differences and enact a final budget. Ohio’s new fiscal year begins July 1. 6/2/2021