SB 246 Summary

• Levies a new tax on pass-through entities' Ohio-apportioned income at 5% for tax year 2022, then at the standard business income tax rate for 2023 and later, with option to elect into the tax.

• Establishes a refundable income tax credit for pass-through entity owners equal to their proportionate share of the entity-level tax paid, allowing excess credits to generate refunds.

• Creates withholding tax on qualifying pass-through entities and trusts with individual owners/beneficiaries, calculated on adjusted qualifying amounts at the standard business income tax rate.

• Imposes filing and payment obligations on qualifying entities and electing pass-through entities, including annual returns, estimated tax payments, and electronic funds transfer requirements for large entities.

• Adds new code sections 5747.38 and 5747.39 and amends multiple existing tax code sections to accommodate the new pass-through entity tax structure and corresponding owner credits.