April 24, 2008 - Tangible Personal
Property Tax Nearing End: Final Returns Due April
COLUMBUS, Ohio – Ohio's local property taxes
on business machinery, equipment and inventory have long been
a source of irritation for Ohio business owners. But, after
more than a century and a half, these taxes are about to fade
into the history books.
The state’s final tangible personal property tax returns are
due from businesses on Wednesday, April 30. The returns will
cover the 2008 tax year, the last for the tangible personal
property tax in Ohio.
The gradual elimination of the personal property tax was a
key element of reforms enacted in 2005 by the Ohio General
Assembly and embraced by Governor Ted Strickland in his
2008-09 state budget plan. The reforms will mean $3.9 billion
in overall annual tax savings by the time they are fully
implemented in the 2010 fiscal year, including $1.6 billion
annual savings in tangible personal property taxes.
Ohio Tax Commissioner Richard A. Levin said the tax has long
been seen as a disincentive to investment. “Every major study
of Ohio’s tax system has criticized this tax for hurting the
state’s ability to compete, particularly when it comes to
manufacturing,” he said. “But this year is the last year for
that tax. Next year, it’s history.”
The tangible personal property tax, Ohio’s largest local
business tax, can be traced back to 1846, when the Ohio
General Assembly enacted a law requiring that all property in
Ohio be taxed by uniform rule. Since 1931, state law has
limited taxes on tangible personal property to machinery,
inventory, furniture, fixtures and other equipment used in
the course of conducting business.
The state’s assessment rate on tangible personal property is
6.25 percent for the 2008 tax year. Next year, the rate drops
to zero – and Ohio will join a select group of nine other
states without a general business tax on tangible personal
property. Among Ohio’s neighbors, all have such a tax except
Where business owners file their final personal property tax
returns depends on whether the business is located in one
county or more than one county. Single-county taxpayers must
file with their county auditor; inter-county taxpayers must
file with the Department of Taxation. Taxpayers may seek to
have the deadline extended to June 15 as long as they make
the request by Wednesday.
When taxes are paid also depends upon the location of the
business. For a business with property in only one county,
one-half of their tax liability is due with their April 30
return and the balance is due by Sept. 20. If a business has
property in more than one county, the total tax liability is
due by Sept. 20.
The phase out of the tangible personal property tax is part
of a larger series of reforms that also include the gradual
elimination of the corporation franchise tax and a 21
percent, across-the-board cut in income tax rates. Revenue
from a new commercial activity tax (CAT) is being used to
compensate schools and local governments for lost personal
property tax revenue.
TAXPAYER CONTACT: Personal Property Tax Division at (614)
MEDIA CONTACT: John Kohlstrand at (614) 644-3858 or Mike
McKinney at (614) 466-5461.