Municipal Income Tax Changes


Changes effective January 1, 2016

Legislation passed by the Ohio General Assembly made many municipal income tax changes to Ohio Revised Code section 718 (ORC 718) including, but not limited to, what is/is not taxable, filing requirements, thresholds and deadlines, penalty and interest rates, as well as how the tax is administered and enforced. Please note that tax filings and payments for tax years beginning before January 1, 2016 are subject to the ordinances and rules and regulations of each municipality as they were in effect at that time, regardless of the date of filing or payment.

Estimated Payments and Due Dates:

You are not required to make estimated payments unless your estimated tax liability for the year (after credits and withholding, if any) is $200 or more. If your estimated tax liability is less than $200, you may still declare an estimate, for which RITA will send billing statements (see Form 32-EXT).

Penalty and interest may be imposed for late or non-payment of your estimated payments, see Penalty and Interest Rates Changes.

Minimum Thresholds – Filing and Refunds:

When filing a return, you are not required to remit payment if the tax due (after credits, estimated payments and withholding) is $10 or less (see Section B, Line 16 of Form 37). A return must still be filed.

Overpayments of $10 or less will not be refunded, but may be applied as a credit towards the following tax year’s estimated tax liability, if applicable.

Filing Extension:

It is not necessary to file your Federal Extension with RITA by April 15th* to extend the time to file your municipal income tax return. A copy of the Federal Extension must be provided when filing your extended return with RITA on or before October 15th.  An extension to file is not an extension to pay.

* This date coincides with the annual income tax return filing deadline, and may change from year to year if the filing deadline is extended due to weekends and/or a legal holiday.

Changes to Qualifying Wages:

"Third-party sick pay" is exempt from withholding and taxation.

"Clergy wages" that are exempt from federal FICA/Medicare withholding are required to be included in qualifying wages and are subject to tax. Please note that the clergy housing allowance exemption remains.

Taxable Income:

Lottery, sweepstakes, gambling and sports winnings, winnings from games of chance, and prizes and awards are taxable, with no minimum thresholds.

Rules regarding the taxation of income of individuals under the age of 18, stock options and nonqualified deferred compensation are set forth in each municipality’s income tax ordinance. For more information see the RITA Municipalities, click on your municipality and select the Special Notes section that relates to the appropriate tax year.

ORC 718 now requires every Ohio municipality with an income tax to allow losses incurred on or after January 1, 2017 to be carried forward for up to 5 years. The law requires a 5-year phase in period at a rate of 50% each year through tax year 2023. There is no change to the net operating loss carryforward permitted by a municipality, if any, for tax years 2015 and 2016.