Ohio taxes income from business sources and nonbusiness sources differently on its individual income tax return.
For taxpayers filing Single or Married Filing Jointly, $250,000 of business income earned by and included in federal adjusted gross income is 100% deductible. For taxpayers who file Married Filing Separately, the first $125,000 of business income included in federal adjusted gross income is 100% deductible. Any remaining business income above these thresholds is then taxed at a flat 3% rate.
Only business income earned by a sole proprietorship or a pass-through entity generally qualifies for the deduction. A pass-through entity includes a partnership, S corporation, and LLC (limited liability company).
The business income deduction is calculated on the Schedule of Business Income. Prior to tax year 2023 this schedule was known as Schedule IT-BUS, Business Income.
To access the Ohio Schedule of Business Income in TaxSlayer Pro, from the Ohio Tax Return Menu select;
- Ohio Taxable Income
- Total Deductions
- Small Business Deduction (IT-BUS)
- Total Business Income
Additional Information:
OH DOT: Business Income Deduction
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