Effective: June 14, 2022
Latest Legislation: Senate Bill 246 - 134th General Assembly
(A) As used in this section and section 5747.39 of the Revised Code and in other sections of Chapter 5747. of the Revised Code in the context of the tax imposed under this section:
(1) "Electing pass-through entity" means a qualifying pass-through entity that elects to be subject to the tax levied under this section for a taxable year pursuant to division (C) of this section.
(2) "Owner" means a person that is a partner, member, shareholder, or investor in an electing pass-through entity for any portion of the taxable year.
(3) "Income" means the sum of owners' distributive shares of the income, gain, expense, or loss of an electing pass-through entity for the taxable year, as reported for federal income tax purposes.
(4) "Qualifying taxable income" means the sum of the following:
(a) The portion of an electing pass-through entity's income that is business income, subject to the applicable adjustments in divisions (A)(2) to (7) of section 5733.40 of the Revised Code, multiplied by the fraction described in division (B)(1) of that section;
(b) The portion of the electing pass-through entity's income that is nonbusiness income allocated to this state under section 5747.20 of the Revised Code.
(B) For the same purposes for which the tax is levied under section 5747.02 of the Revised Code, a tax is hereby levied on each electing pass-through entity on the entity's qualifying taxable income for the taxable year, at the following rates:
(1) For an electing pass-through entity's taxable year that begins in 2022, five per cent;
(2) For an electing pass-through entity's taxable year that begins in 2023 and in any year thereafter, the rate equal to the tax rate imposed on taxable business income under division (A)(4)(a) of section 5747.02 of the Revised Code applicable to that taxable year.
(C) A pass-through entity that is not a disregarded entity, as defined in section 5733.01 of the Revised Code, may elect to be subject to the tax levied under this section by filing with the tax commissioner a form prescribed by the commissioner making such election on or before the deadline to file the return under section 5747.42 of the Revised Code for the taxable year. Such election applies only to the taxable year for which the election is made and is, once made, irrevocable for that year.
(D) The tax levied under this section shall be calculated without regard to any deductions or credits otherwise permitted to be claimed by an owner of the electing pass-through entity in computing the owner's aggregate tax liability under section 5747.02 of the Revised Code.
(E) The tax levied under this section is intended to comply with the provisions of internal revenue service notice 2020-75 in which such tax paid by an electing pass-through entity is deductible to the entity for federal income tax purposes.
(F) The tax commissioner shall adopt rules to administer the tax levied under this section. Such rules shall include a description of how the adjustments to income under divisions (A)(36) and (S)(15) of section 5747.01 of the Revised Code and the credit under section 5747.39 of the Revised Code apply to direct or indirect owners of an electing pass-through entity based on various ownership structures. Any rule adopted under this section is not a regulatory restriction for the purpose of section 121.95 of the Revised Code.
Last updated October 6, 2022 at 4:01 PM
Structure Ohio Revised Code
Section 5747.01 | Definitions.
Section 5747.011 | Gain or Loss Included in Trust's Ohio Taxable Income.
Section 5747.012 | Tax Treatment of Qualifying Investment Income From Pass-Through Entity.
Section 5747.013 | Calculating a Trust's Modified Ohio Taxable Income.
Section 5747.021 | School District Income Tax.
Section 5747.022 | Tax Credits for Exemptions.
Section 5747.024 | Military Pay Not Included in Adjusted Gross Income.
Section 5747.025 | Personal Exemptions.
Section 5747.026 | Extensions for Filing and Payment by Members Called to Active Duty.
Section 5747.03 | Distributing Income Tax Revenue.
Section 5747.031 | Separate Reporting of Business and Nonbusiness Income Tax Revenues.
Section 5747.04 | Attributing Tax Receipts to County.
Section 5747.05 | Tax Credits.
Section 5747.054 | Tax Credit Based on Federal Dependent Care Credit.
Section 5747.055 | Tax Credit for Retirement Income.
Section 5747.057 | Tax Credit for Career-Technical Education Program Employees.
Section 5747.058 | Tax Credits to Foster Job Creation or Retention.
Section 5747.06 | Employer's Duty to Withhold Tax.
Section 5747.061 | Withholding Tax From Wages of Nonresident Employees.
Section 5747.062 | Withholding Tax From State Lottery Winnings.
Section 5747.063 | Withholding From Casino and Sports Gaming Winnings.
Section 5747.064 | Withholding From Video Lottery and Sports Gaming Winnings.
Section 5747.07 | Employers to File Return and Pay Withholding.
Section 5747.071 | Withholding Tax From Retirement Benefits.
Section 5747.072 | Employers Remitting Taxes by Electronic Funds Transfer.
Section 5747.08 | Filing Income Tax Return.
Section 5747.082 | Use of Electronic Filing by Tax Preparers.
Section 5747.083 | Report or Payment of Use Tax on Personal Income Tax Return.
Section 5747.09 | Declaration of Estimated Taxes.
Section 5747.10 | Amended Returns.
Section 5747.11 | Refunds - Interest.
Section 5747.112 | Paying Refund of School District Income Taxes.
Section 5747.113 | Income Tax Refund Contribution System.
Section 5747.12 | Applying Refund to Satisfy Debt to State.
Section 5747.121 | Collecting Child Support From Refunds.
Section 5747.122 | Collecting Overpayments of Public Assistance From Refunds.
Section 5747.123 | Collecting Overpaid Child Support From Refunds.
Section 5747.13 | Liability of Employer for Failure to File Return or Collect or Remit Tax.
Section 5747.132 | Eliminating Interest or Penalty on Qualifying Refund Overpayment.
Section 5747.14 | Imposing Jeopardy Assessments.
Section 5747.15 | Failure to File or Remit Tax - Filing Frivolous, Dilatory or Fraudulent Claim.
Section 5747.16 | Secretary of State Agent for Service of Process on Nonresidents.
Section 5747.17 | Maintaining Records.
Section 5747.18 | Powers of Tax Commissioner.
Section 5747.19 | Filing Incomplete, False, and Fraudulent Returns.
Section 5747.20 | Allocating Nonbusiness Income or Deduction.
Section 5747.21 | Apportioning Business Income or Deduction.
Section 5747.22 | Apportioning and Allocating Income and Deductions of Pass-Through Entities.
Section 5747.221 | Items of Income and Deductions Not to Be Allocated or Apportioned to Ohio.
Section 5747.23 | Taxing Trust Income.
Section 5747.24 | Presumption of Domicile.
Section 5747.26 | Lead Abatement Tax Credit.
Section 5747.29 | Political Campaign Contribution Tax Credit.
Section 5747.30 | Exemption for Nonresident Pass-Through Entities as to Commercial Printing.
Section 5747.37 | Credit for Legally Adopted Minor Child.
Section 5747.38 | Pass-Through Entity Income Tax.
Section 5747.39 | Pass-Through Entity Owner Credit.
Section 5747.40 | Definitions Relating to Qualified Pass-Through Entities.
Section 5747.42 | Filing Annual Return.
Section 5747.43 | Filing Estimated Tax Return and Making Estimated Payments.
Section 5747.44 | Tax Payment by Electronic Funds Transfer.
Section 5747.46 | Library and Local Government Support Fund Definitions.
Section 5747.48 | Distribution of County Library and Local Government Support Fund.
Section 5747.49 | Prohibiting Later Performance of Duties.
Section 5747.501 | Estimating and Certifying Amount for Distribution Into Local Government Fund.
Section 5747.502 | Reports on Fines Resulting From Traffic Law Photo-Monitoring Devices.
Section 5747.503 | Payments to County Undivided Local Government Funds of Supplement for Townships.
Section 5747.51 | Allocating Local Government Fund to County Undivided Local Government Funds.
Section 5747.52 | Calculating Subdivision Share of Undivided Local Government Fund.
Section 5747.54 | Failure to Certify Percentage Share of the Undivided Local Government Fund.
Section 5747.55 | Appealing County Budget Commission Action.
Section 5747.60 | Delegating Investigation Powers of Tax Commissioner.
Section 5747.70 | Deductions for Contributions to College Savings Programs.
Section 5747.71 | Earned Income Tax Credit.
Section 5747.72 | Credit for Home Instruction Expenses.
Section 5747.73 | Credit for Donations to Scholarship Organizations.
Section 5747.75 | Credit for Dependents Who Attend Nonchartered Nonpublic School.
Section 5747.76 | Refundable Income Tax Credit for Owner of Rc 149.311 Certificate.
Section 5747.77 | Beginning Farmer Tax Credits.
Section 5747.78 | Deductions for Amounts Contributed to Able Savings Account.
Section 5747.79 | Deduction for Capital Gains From Sale of Business.
Section 5747.80 | Issuance of Tax Credits by Ohio Venture Capital Authority.
Section 5747.81 | Tax Credit for Holders of Small Business Investment Certificate.