News Release
For immediate release: Monday, Aug. 2, 2010
New Ohio income tax tables will save taxpayers $25
million
The Ohio Department of Taxation today unveiled its first-ever
adjustment of Ohio’s individual income tax tables for
inflation, a move that will save Ohioans an estimated $25
million annually starting with the returns due next spring.
Ohio Tax Commissioner Richard A. Levin said that the income
levels associated with each of Ohio’s nine income tax
brackets will be adjusted by 0.9 percent for the 2010 taxable
year. This adjustment, based on federal economic data
released last Friday, will translate into an estimated $25
million annual savings when compared to what Ohio taxpayers
would have collectively paid without the adjustment.
The periodic adjustment of tax brackets for inflation is
known as “indexing.” Indexing is designed to prevent “bracket
creep” – the tendency for individuals’ incomes to creep into
a higher tax bracket because of nominal increases in income,
even when the real value of that income has not increased.
“The purpose of indexing is to prevent people from being
pushed into a higher tax bracket when their paychecks are
only keeping up with inflation,” Levin said. Adjustment of
tax brackets for inflation will benefit the vast majority of
taxpayers, regardless of how their income has changed, he
said.
The adjustment is being done in accordance with Ohio Revised
Code section 5747.02, which calls on the tax commissioner to
adjust brackets each July starting this year. The calculation
was made on Friday based on new data released by the U.S.
Department of Commerce Bureau of Economic Analysis.
Ohio’s indexing law actually dates back to 2002, when the
124th General Assembly called for brackets to be adjusted
annually starting in 2005. But before the first adjustment
could take place, lawmakers postponed indexing for an
additional five years as part of a broad tax reform plan that
included five annual income tax rate cuts of 4.2 percent
each. Four of those income tax rate reductions are now in
place, collectively saving Ohioans about $1.7 billion during
the 2010 fiscal year. The fifth rate cut is scheduled for
2011.
Ohio joins about a dozen other states that also index their
tax brackets to inflation, including Arkansas, California,
Idaho, Iowa, Maine, Minnesota, Montana, North Dakota, Oregon,
South Carolina, Vermont and Wisconsin.
# # #
A schedule of Ohio’s new individual income tax brackets
is below. Media with additional questions should contact John
Kohlstrand at (614) 644-3858 or Mike McKinney at (614)
466-5461. Taxpayers with questions should call either (800)
282-1780 for individual tax matters or (888) 405-4039 for
business tax concerns.
Ohio’s income tax brackets: 2009 and 2010
|
|
2009
|
|
2010
|
|
Tax rates
|
|
|
Bottom
|
Top
|
|
Bottom
|
Top
|
|
(no change)
|
|
Bracket 1
|
|
$0
|
$5,000
|
|
$0
|
$5,050
|
|
0.618%
|
|
Bracket 2
|
|
$5,001
|
$10,000
|
|
$5,051
|
$10,100
|
|
1.236%
|
|
Bracket 3
|
|
$10,001
|
$15,000
|
|
$10,101
|
$15,150
|
|
2.473%
|
|
Bracket 4
|
|
$15,001
|
$20,000
|
|
$15,151
|
$20,200
|
|
3.091%
|
|
Bracket 5
|
|
$20,001
|
$40,000
|
|
$20,201
|
$40,350
|
|
3.708%
|
|
Bracket 6
|
|
$40,001
|
$80,000
|
|
$40,351
|
$80,700
|
|
4.327%
|
|
Bracket 7
|
|
$80,001
|
$100,000
|
|
$80,701
|
$100,900
|
|
4.945%
|
|
Bracket 8
|
|
$100,001
|
$200,000
|
|
$100,901
|
$201,800
|
|
5.741%
|
|
Bracket 9
|
|
$200,001
|
and over
|
|
$201,801
|
and over
|
|
6.24%
|