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Delayed Gratification For Ohio Employees
By: Tim Sharp
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If you're ready to tear that pay envelope open to see how much Ohio's payroll tax will put back into your pocket, you may be disappointed.
The anticipation comes with new income tax withholding schedules that will allow you to keep more of your money – eventually.
The tax-reform measure that cuts individual income tax rates by 10 percent over three years is set to begin September 1, but that does not mean you'll see the results of reduced withholding on your check at the end of this month.
That's the date employers will begin the process of withholding less money.
Those savings however won't appear until after that date.
For some that means two weeks later, some a month depending on your scheduled pay date.
At Ohio University, the largest employer in Southeast Ohio, the payroll department hadn't even begun the process of encoding the new tax rates as of Thursday, August 29.
When you do receive your first pay after September first, you should see more dollars than expected.
The tax cut will be retroactive to the beginning of the calendar year even though employers haven't been required to make the change until after the start of September.
The first year of the tax reform measure is expected to save employees 8.5 percent.
That moves to 9 percent the second year and 10 percent in the third year.
The tax measure also puts money back into the pockets of small business which will see a 50 percent reduction in income tax on the first $250,000 of profits.
But with tax cuts comes a price.
The state's sales tax is set to increase by .25 percent.
Not a big jump, but that change you won't have to wait for.