House Approves 6.3% Income Tax Cut

After weeks of studying the sweeping proposals from Gov. John Kasich in his executive budget for FY16-17, House Republicans unveiled their version Tuesday that largely strips out the proposed sales tax expansion to consultants and others as well as the severance, tobacco and CAT taxes and dedicates more money to school districts so that fewer will lose funds in the next biennium.

The House proposal will give a 6.3 percent across-the-board income tax cut beginning in Tax Year 2015 worth $1.2 billion over the biennium, which will lower the top tax rate to 4.997 percent. The substitute bill will also make the 75 percent small business tax deduction that was adopted by the 130th General Assembly permanent.

House Speaker Cliff Rosenberger (R-Clarksville) says he believes in the direction Kasich is trying to take the state long term, but said he wanted to give businesses tax certainty and get everyone on the same page as they move along the path that Kasich has laid out in his executive budget.


 To that end, the substitute bill includes the creation of the 2020 Tax Policy Study Commission, which will examine the state’s tax policies in comparison to other states. Rosenberger said it will include members of the House and Senate as well as the tax commissioner and budget director to look at tax policies and make recommendations. Among the items that will be studied by the commission will be an increase in the severance tax, something Kasich has pushed for but which has been resisted by lawmakers and the oil and gas industry, who have argued for a much lower tax than proposed by the governor.