Ohio Legislation: Attorney Business Income Deduction

Post date: Jun 12, 2017 2:50:30 PM

Update: The OSBA successfully fought the tax increase for lawyers.  On November 6, 2019, the OSBA announced "It's Official - No Tax Increase for Lawyers in 2020!"  Message from OSBA President Eleana Drakatos and OSBA CEO Mary Augsburger: Today, Governor Mike DeWine made it official. He signed into law legislation that would repeal an unfair and unworkable state budget amendment that would have caused many Ohio lawyers to pay higher income taxes starting in tax year 2020.

However, "Not Out of the Woods - Looking Ahead"

While we can all breathe a momentary sigh of relief, we are not out of the woods.

There is still a strong desire among key policy makers to reform the business income deduction ("BID") and to explore even broader tax policy changes, all of which could have an impact on the legal profession. That means, we could see future efforts to limit the BID (including but not limited to lowering the income threshold, raising the flat rate percentage, limiting eligibility, or adding requirements to claim it) and/or a rehash of previous proposals to expand the state sales tax to legal services, which the OSBA has vehemently opposed for years.

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Below is a link to a legislative alert by the Ohio State Bar Association regarding Ohio's recently passed state budget targeting attorney business income.  The LCBA is providing this information for awareness purposes only.  Please direct your questions to the instructions provided in the links below.

According to the OSBA: "In an 11th hour amendment, lawyers were singled out and come 2020, will be facing a significant tax increase as they will no longer be able to claim the state Business Income Deduction or "BID." Established in 2013, the BID has allowed those deriving income from any pass-through entity (LLCs, LLPs, etc.) to pay no tax on the first $250,000 of their income and to pay a flat 3% on any income above that threshold. Meanwhile, other similarly-situated professionals were not impacted by this change and will continue to be able to use the BID."

OSBA membership is not required to view the online materials.

Legislative Alert: https://www.ohiobar.org/advocacy/2019-weekly-reports/weekly-legislative-report-budget19/

Online Toolkit: https://www.ohiobar.org/get-involved/toolkit/

Get Involved: https://www.ohiobar.org/GetInvolved