COLUMBUS, Ohio – An
ongoing, five-year effort to improve Ohio’s business
tax climate reaches another milestone this week when
the century-old corporation franchise tax comes to an
end for the vast majority of Ohio corporations.
The final deadline to file 2009 corporation franchise
tax returns is Thursday, Oct. 15. This deadline applies
to corporations whose taxable year ended Dec. 31, 2008
that sought and received an extension from the Internal
Revenue Service, a common practice by large businesses.
Once corporations file 2009 franchise tax returns
(along with a check for any balance due, if necessary),
the vast majority of them will be done with the tax for
“Two governors and three general assemblies have helped
get us to this place,” Ohio Tax Commissioner Richard A.
Levin said. “This deadline represents another milestone
in the effort to improve the business climate in Ohio.”
The corporation franchise tax dates back to 1902. For
most corporations, it represents a tax of either 0.4
percent on the net worth of the corporation or a tax of
up to 8.5 percent on net income (profits). The
calculation that applies is the one that produces the
The tax is being phased out as part of a larger package
of reforms contained within House Bill 66, enacted by
the Ohio General Assembly in 2005. Other components
- The elimination of property taxes on business
machinery, equipment and inventory.
- A new commercial activity tax (CAT), measured by
- Five annual 4.2 percent reductions in state income
Overall, these and other tax changes contained within
House Bill 66 represent a net annual tax cut of about
$1.8 billion annually starting in fiscal year 2010.
This estimate assumes the General Assembly follows
through on Governor Strickland’s proposal to prevent
deep cuts to education by temporarily postponing the
fifth and final 4.2 percent income tax rate reduction
originally planned for 2009.
The phase out of the corporation franchise tax does not
apply to a small number of corporations – primarily
financial institutions, which will continue to pay a 13
mill tax on their net worth.
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Note: For more detailed information on the ongoing
effort to phase in tax changes contained within House
Bill 66, a fact sheet is available at: Fact sheet: Tax reform in Ohio.
Members of the news media with further questions should
contact John Kohlstrand at (614) 644-3858. Taxpayers
with business tax questions should call (888) 405-4039.