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 rely on tips as a significant part of their income. The proposed amendments explicitly insert the term "tips" into the definition of "exempt income," allowing individuals to exclude this form of compensation from their taxable income. This change reflects a growing recognition of the importance of tips in the earnings of service industry workers and aligns with broader tax reform efforts aimed at alleviating financial burdens on these workers.

In addition to the provisions regarding tips, the bill introduces several amendments related to municipal income tax, including the treatment of net operating losses and the taxation of various business entities. It defines "net profit" for non-individual entities and allows for the deduction of net operating losses to reduce municipal taxable income, with specific limitations on deductions for certain years. The bill also clarifies the tax treatment of disregarded entities and publicly traded partnerships, introduces new definitions related to taxation, and aims to streamline the tax code for better clarity and compliance. Overall, the bill represents a comprehensive effort to refine Ohio's tax framework, ensuring that definitions and processes are clearly articulated for taxpayers and tax administrators.

Statutes affected:
As Introduced: 718.01, 5747.01, 5748.01