COLUMBUS – New Year’s Day will bring with it another series of cuts in state tax rates – the latest step in an ongoing reform of Ohio’s tax system.
The most obvious change for most taxpayers will be lower withholding rates, which take effect for pay periods ending on or after Jan. 1, 2008. The lower withholding rates will increase the take-home pay of Ohioans by approximately $350 million during 2008.
One step. They represent a 4.2 percent decrease from 2007, and are another step in the phase in of a 21-percent, across-the-board income tax cut that will be complete by 2009.
Overall, 2008 withholding rates will be 16.8 percent lower than they were in 2004 – in line with income tax rates that will also be 16.8 percent lower for the 2008 taxable year (and 2009 filing season).
Next year, a family of four earning $60,000 will save about $350 when compared with 2004 tax rates.
The new income tax rates are part of a package of tax reforms enacted by the Ohio General Assembly in 2005, and embraced by Gov. Ted Strickland in his 2008-2009 budget proposal.
The reforms also include major changes for business taxes in 2008. Notably, 2008 will be the last year most business owners face a tax on tangible personal property such as machinery, equipment, furniture, fixtures and inventory.
In 2008, personal property will be assessed for tax purposes at 6.25 percent of true value, down from 12.5 percent in 2007.
Businesses. In 2009, personal property assessment rates will fall to zero for most businesses – making Ohio one of just 10 states without a general business tax on tangible personal property.
The tangible personal property of business has been taxed since 1846 in Ohio. But it is disliked by business owners, who have come to see it as a disincentive to investment.
Other major changes ahead for the 2008 taxable year:
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