Ohio sales tax to increase one-quarter percent

Sales tax rates for Ohio counties in our area
Sales tax rates for Ohio counties in our area

CINCINNATI, OH (FOX19) - Ohio employees paying state income taxes will see a tax cut on paychecks beginning in September.

The Ohio Department of Taxation has issued new employer withholding tables to be used for payroll. The new tables go into effect on September 1.

The new tables take into consideration the income tax rate reductions that went into effect when Amended Substitute House Bill 59 was signed into law. Employees paying state income taxes will pay 9% less starting in September and by 2015 a total of 10% less.

The new implementation will also cut small business taxes by up to 50% up to the first $250,000 of business income. The small business rate cut will take effect on January 1, 2013.

The new tax reform will, however, increase sales tax rates by 0.25%, a total of $1.15 billion over three years.

The history of sales tax in Ohio began in 1935 at 3%and slowly increased over the decades to 6% in 2003 which was later dropped to 5.5%. The latest change brings Ohio's state sales tax to 5.75% not including additional rates at the county level.

The Ohio Department of Taxation anticipates an overall net tax cut of $2.7 billion over the next three years. The goal is to create jobs and economic growth.

According to the department, groceries and take-out are exempt from sales tax along with housing and utilities, medical, and other expenses like education, prescription drugs, and gas. That means for the average household 35% of all purchases will be impacted.

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