Ohio Decreases Tax Rate for Low Income Individuals and Families
The State of Ohio decreased the income tax rate for many Ohioans this week, as well as municipal fees for filing taxes late. Here is a summary of the changes:
No income tax is owed by Ohio residents earning $26,050 or less per year. This was the same as in previous years, and does not change with Ohio’s new tax budget.
Ohio residents earning between $26,000 and $100,000 will owe 2.75% of their annual income in State taxes, which is less than owed in previous years. The decreased taxes, however, are greater for those at the higher end of this income bracket. The biggest decrease within this bracket is for those who earn between $92,150 and $100,000. These individuals will see a .938% decrease in their annual income tax. Their previous annual income tax rate was 3.688%.
The next biggest decrease within this tax bracket will be for Ohioans who earn from $46,100 to $92,150 a year. These Ohioans will see a .47% decrease in their annual income tax. Their previous annual income tax rate was 3.226%.
The smallest decrease in income tax will be for Ohioans earning between $26,000 and $46,100. They will see only a .015% decrease in their annual tax rate. Their previous tax rate was 2.765%.
Ohioans making over $100,000 a year will owe 3.5% of their annual income in State income taxes. For those making between $100,000 and $115,300, this will be a .188% decrease in their income tax rate. Their previous rate was 3.688%. Those making over $115,300, will see the biggest decrease in annual income taxes, a .49% decrease. Their previous income tax rate was 3.99%.
In total, these changes are estimated to cut $3 billion dollars from the Ohio budget. How those cuts will effect services for lower income individuals will be determined in coming months.
Another change is that late fees for tax returns will be capped at $25 instead of the current $150. Additionally, any late filing penalty imposed on a taxpayer’s first late filing is required to be refunded or abated once the overdue return is filed. Also new, is that individuals under the age of 18 will no longer need to pay Ohio municipal income tax.
The United Way of Greater Cincinnati operates free income tax preparation and filing services to help individuals and families. You can learn about these services in our previous article: Free Tax Prep Sites Operated by the United Way. It is an annual program.