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Ohioans Will See Tax Changes Over The Weekend
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Two big changes are coming to taxes in Ohio this weekend: The state sales tax goes up, and the state’s personal income tax goes down.
The income tax rate for individual taxpayers will drop by 8.5 percent, while the state sales tax goes up a quarter of a percent,from 5.5 percent to 5.75 percent. Tax Commissioner Joe Testa says most people won’t notice the sales tax increase.
“Obviously if someone was about to make a really large taxable purposes, then they might notice it – a new car or something like that. But for regular purposes – clothing, hardware, those kinds of things that are taxable – it’s a matter of a few cents.”
And even then, Testa says, it’s more than a wash.
“The reduction in the personal income tax is certainly going to more than offset by – if not double, two or three times what you would pay typically in additional tax on the quarter percent side,” says Testa.
Testa notes that food, housing, health care and other so-called essentials aren’t taxed. But Wendy Patton with the liberal leaning think tank Policy Matters Ohio says even the 20% income tax cuts from a few years ago were hardly noticed by most people.
But she thinks the sales tax increase will be.
“For people of low income, there’s an immediate notice of what the state’s sales tax adds to every purchase.”
Patton continues to point to a Policy Matters-backed study from earlier this year that found the tax changes brought big breaks to people in the top 1% income bracket.
“More than $6,000 a year to the very top earners in Ohio, but we found those in the bottom fifth with income below $18,000 will actually face an increase of taxes of about $12 a year,” Patton says.
“I think people will feel it, and it will impact them in a way that’s not fair.”
The sales tax increase will bring in $295 million dollars this fiscal year, and the income tax cut will cost the state $863 million.