OH SB266

Amends Ohio income tax law to reduce tax rates on capital gains that are reinvested in Ohio-based investments, effective for taxable years beginning January 1, 2010 and later.

Defines "Ohio-based reinvestment" to include investments in Ohio corporations, pass-through entities owned by Ohio taxpayers, Ohio public obligations, tangible personal property in Ohio, and Ohio real property.

Creates a 2.5% tax rate on Ohio-based reinvestments for individuals, while allowing deductions for reinvested capital gains up to the amount of net modified capital gains from non-Ohio investments.

Imposes a "clawback" mechanism requiring taxpayers to add back reinvestments sold or disposed of within three years, plus 10% penalty and interest, unless offset by new Ohio-based reinvestments made in the same tax year.

Adjusts individual income tax brackets and rates downward starting in 2010, with annual inflation adjustments beginning in 2010 based on gross domestic product deflator.