facebooktwitterRSS
- Advertisement -
  • Most Commentedmost commented up
  • Most Emailedmost emailed up
  • Popularmost popular up
- Advertisement -
 

« News Home

Ohio sales tax increases, income tax decreases



Published: Sat, August 31, 2013 @ 12:00 a.m.

By Marc Kovac

news@vindy.com

COLUMBUS

Thinking about buying a car or a sofa or some fancy designer jeans?

You might want to do so, posthaste, as your final bill for those and other items will go up come Sunday, thanks to a sales tax increase approved by lawmakers earlier this year.

Or you could wait until after Sunday and cover the cost with the extra money included in your paycheck, thanks to an income tax cut that’s also set to take effect over the weekend.

Both were part of the $62 billion biennial budget signed into law by Gov. John Kasich on the eve of the start of the new fiscal year July 1, with an effective date of Sept. 1.

Here are 10 things you should know about the tax policy changes and how they will affect your pocketbook:

1Sales Tax Increase: The state sales tax rate is increasing to 5.75 percent from 5.5 percent.

The change will add a quarter of cost for every $100 purchased, according to Gary Gudmundson, spokesman for the Ohio Department of Taxation.

For $100 in taxable goods, you would owe the state $105.75 under the increase that takes effect Sunday, versus $105.50 under the rate that’s in effect today.

2Different Rates: Remember, that’s just the state rate. All counties have higher rates, as allowed under state law. Counties and transit authorities can add up to 1.5 percent more, according to the department of taxation.

Cuyahoga County has the highest overall sales tax rate, at 7.75 percent (or 8 percent starting Sunday). Wayne and Stark are among the lowest, at 6.25 percent (6.5 percent starting Sunday).

3Collections: Sales taxes are the second-largest category of state tax collections, with more than $9 billion collected annually, according to Gudmundson. Income tax collections are the largest, at $10.8 billion.

4 What’s Going To Cost More: The list of products and services that are subject to Ohio sales tax collections is lengthy.

It includes books and movies and other products purchased online from another state, hotel room rentals, automobile towing, clothes laundering, snow removal, back-to-school clothes, automobiles, boats, beer, soft drinks and tobacco products.

Most consumers pay sales tax at their point of purchase, though they’re still on the hook if they buy something online. There’s a line on state income tax returns to declare such purchases.

5What’s Not Taxed: Keep in mind that many other regular purchases made by Ohio consumers are not subject to sales tax.

That includes groceries or food purchased at a carry-out restaurant, prescription drugs and housing.

Other items exempt from Ohio sales tax collections include newspapers, motor fuel and utilities (water, electricity and natural gas).

6About Those Little Cigars: Yes, “little cigars” are subject to the sales tax increase.

And the cost for those particular smokes may go up again come Oct. 1, when the excise tax increases to 37 percent of the wholesale price, from the current 17 percent.

7 Income Tax Drop: While the sales tax rate is going up, income tax rates are going down, to the tune of 9 percent this year and 10 percent over the next three years.

That will mean a little more take-home pay starting next week and a potentially bigger tax refund next year.

State taxation officials reminded businesses a couple of weeks ago about the change and new withholding tables that will go into effect Sunday.

8Annual Savings: Under the current income tax rate, a person earning $50,000 with one exemption owes the state about $1,269.

Under the new rate taking effect Sunday, that same tax bill will be reduced to $1,152.

That’s a savings of more than $100 annually.

9Biweekly: For that same $50,000 income earner, the state currently takes $24.13 out of each paycheck every other week.

Under the reduced rates, the withholding will be $21.96.

That’s eight quarters, one dime, one nickel and two pennies more in your pocketbook every two weeks.

10 Tax Refund: The new tax rate is retroactive to the beginning of the year, so tax refunds could be increased or tax bills could be cut during filing season to account for higher withholding during the first eight months of the year.


Comments

Use the comment form below to begin a discussion about this content.


News
Opinion
Entertainment
Sports
Marketplace
Classifieds
Records
Discussions
Community
Help
Forms
Neighbors

HomeTerms of UsePrivacy StatementAdvertiseStaff DirectoryHelp
© 2014 Vindy.com. All rights reserved. A service of The Vindicator.
107 Vindicator Square. Youngstown, OH 44503

Phone Main: 330.747.1471 • Interactive Advertising: 330.740.2955 • Classified Advertising: 330.746.6565
Sponsored Links: Vindy Wheels | Vindy Jobs | Vindy Homes