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Ohio Gov.’s New Budget Proposal Could Hit Seniors in Their Wallets

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Ohio Gov. John Kasich’s new budget proposal calls for a slew of tax changes – including lower income taxes for everyone.

But one particular part of the budget could hit some seniors in their wallets.

One of the budget’s proposals calls for levying a state tax on Social Security benefits received by high-income retirees.

Ohio doesn’t currently tax Social Security income. But under the new proposal, the state would levy a new tax on benefits received by people with total incomes of more than $100,000.

If you make less than $100,000 annually, the state Social Security tax won’t apply to you.

Cleveland.com offers an explanation of exactly how the tax would work:

For years, a portion of Social Security benefits have been taxable at the federal level for individuals with income of at least $25,000, including pensions and tax-exempt interest. The threshold for couples is $32,000.

In these cases, up to 85 percent of the Social Security income can become taxable.

Since Line 1 of the Ohio income tax form starts off by asking for the the federal adjusted gross income, the taxable Social Security income is carried over from the federal form to the state form.

Ohio, however, currently allows for a full deduction of that amount, meaning there is no Ohio income tax on this money.

The governor’s proposal calls for keeping that deduction for only those with less than $100,000 of income.

Read the full budget here.

 

Photo by 401kcalculator.org via Flickr CC License

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