NE Ohio taxpayers could get hurt by parts of tax reform, may be helped by other parts

Sunday, 05 November 2017, 08:34:57 PM. The federal tax reform introduced into Congress this week could hit Northeast Ohio residents harder in at least one area: the elimination of deductions for state and local income taxes.
CLEVELAND, Ohio - The federal tax reform introduced into Congress this week could hit Northeast Ohio residents harder in at least one area: the elimination of deductions for state and local income taxes. The proposed Tax Cuts and Jobs Act introduced Thursday would reduce the number of tax brackets and eliminate deductions for many expenses, including medical bills, adoption costs, student loan interest and interest on new, large mortgages. But the proposed plan to get rid of the deduction of taxes paid on state and local income would hit some harder in Ohio than in other parts of the country. When people think of the high-tax states, they often think of California, New York, New Jersey and others. Ohio falls somewhere in the bottom quarter of tax rates, said Akron CPA Dave McClain, with the highest rate being just shy of 5 percent. But there's more to the story. "However, Ohio, unlike many states, also has a city income taxing system that can reach 2.5 percent on earned income. This combined rate would move Ohio into the top quarter of state income tax rates," said McClain, tax partner at BDO USA. At the same time, the proposal includes increasing the standard deduction, as well as disallowing other types of itemized deductions. This combination, McClain said, "means it is likely a significant portion of taxpayers in Ohio" who currently itemize their taxes would choose instead to claim the standard deduction. The state and local tax deduction would be a big driver of this, he...Read more
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