OH HB134

Amends Ohio income tax code to create a reduced tax rate for capital gains that are reinvested in Ohio-based investments, effective for taxable years beginning January 1, 2011 or later.

Defines "Ohio-based reinvestment" to include investments in Ohio-incorporated businesses with headquarters in Ohio, pass-through entities owned by Ohio taxpayers, Ohio public obligations, Ohio-located tangible business property, and Ohio real property.

Establishes a 2.5% tax rate on Ohio-based reinvestments, versus regular income tax rates up to 5.925% for other income, allowing taxpayers to choose the computation method that produces the lower tax.

Requires taxpayers who dispose of Ohio-based reinvestments within three years to recapture the tax benefit by adding back the original investment amount plus 10% interest, unless reinvested in new Ohio-based investments.

Implements exemptions under new section 5747.025 and adjusts income brackets annually for inflation using the gross domestic product deflator.