Print Version (.PDF)

Major tax changes are in store for companies that do business in Ohio thanks to tax reforms enacted by the General Assembly in 2005.

Most notably, this will be the last year that most business owners face a tax on tangible personal property such as machinery, equipment, furniture, fixtures and inventory. (See Chart.) In 2009, personal property assessment rates will fall to zero for most businesses, making Ohio one of just 11 states without a general business tax on tangible personal property.

The tangible personal property of businesses has been taxed since 1846 in Ohio. Business owners have come to see it as a disincentive to investment. During the past 40 years, several major studies of Ohio’s tax system have criticized the tax for hurting the state’s ability to compete for jobs, particularly in the manufacturing sector.

Other major changes ahead for Ohio’s 2008 taxable year:

• Payments on the corporation franchise tax, a business privilege tax on either net worth or net income, will fall to 40 percent of 2005 levels, down from 60 percent in 2007.

• The commercial activity tax (CAT), a new business privilege tax on gross receipts, will rise from 0.156 percent to 0.208 percent on April 1. The CAT is being phased in to partially offset revenue lost from the phase out of the corporation franchise tax and the elimination of taxes on the tangible personal property of most businesses.