The bill, introduced by Representative Lorenz, seeks to amend sections of the Ohio Revised Code to exempt tips from state, municipal, and school district income taxes, thereby providing financial relief to individuals who earn tips as part of their income. The proposed amendments explicitly insert the term "tips" into the definition of "exempt income," ensuring that this form of compensation is no longer subject to taxation at the state and local levels. This change acknowledges the variable nature of tip income, particularly for workers in the service industry, and aligns with broader tax reform efforts aimed at reducing the financial burden on these individuals.

In addition to the exemption for tips, the bill introduces various amendments related to municipal income tax, including the treatment of net operating losses and the definitions of key tax terms. It clarifies that net operating losses can be carried forward for up to five years, with specific limitations on their use, and defines terms such as "adjusted federal taxable income" and "qualified municipal corporation." The bill also repeals existing sections of the tax code, indicating a significant overhaul of the tax structure, particularly concerning school district income taxes and the treatment of income for trusts and pass-through entities. Overall, the legislation aims to enhance clarity and fairness in the tax code while ensuring compliance with federal regulations.

Statutes affected:
As Introduced: 718.01, 5747.01, 5748.01