As Introduced
136th General Assembly
Regular Session H. B. No. 87
2025-2026
Representatives Click, Klopfenstein
Cosponsors: Representatives Deeter, Robb Blasdel, Teska, King, Lear, Claggett,
Dean, John, Thomas, D., Gross, Williams
A B I L L
To amend sections 5739.02, 5747.01, and 5747.025 of
the Revised Code to authorize tax incentives for
conceived children and certain child care items
and to name this act the Strategic Tax
Opportunities for Raising Kids (STORK) Act.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 5739.02, 5747.01, and 5747.025 of
the Revised Code be amended to read as follows:
Sec. 5739.02. For the purpose of providing revenue with
which to meet the needs of the state, for the use of the general
revenue fund of the state, for the purpose of securing a
thorough and efficient system of common schools throughout the
state, for the purpose of affording revenues, in addition to
those from general property taxes, permitted under
constitutional limitations, and from other sources, for the
support of local governmental functions, and for the purpose of
reimbursing the state for the expense of administering this
chapter, an excise tax is hereby levied on each retail sale made
in this state.
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(A)(1) The tax shall be collected as provided in section
5739.025 of the Revised Code. The rate of the tax shall be five
and three-fourths per cent. The tax applies and is collectible
when the sale is made, regardless of the time when the price is
paid or delivered.
(2) In the case of the lease or rental, with a fixed term
of more than thirty days or an indefinite term with a minimum
period of more than thirty days, of any motor vehicles designed
by the manufacturer to carry a load of not more than one ton,
watercraft, outboard motor, or aircraft, or of any tangible
personal property, other than motor vehicles designed by the
manufacturer to carry a load of more than one ton, to be used by
the lessee or renter primarily for business purposes, the tax
shall be collected by the vendor at the time the lease or rental
is consummated and shall be calculated by the vendor on the
basis of the total amount to be paid by the lessee or renter
under the lease agreement. If the total amount of the
consideration for the lease or rental includes amounts that are
not calculated at the time the lease or rental is executed, the
tax shall be calculated and collected by the vendor at the time
such amounts are billed to the lessee or renter. In the case of
an open-end lease or rental, the tax shall be calculated by the
vendor on the basis of the total amount to be paid during the
initial fixed term of the lease or rental, and for each
subsequent renewal period as it comes due. As used in this
division, "motor vehicle" has the same meaning as in section
4501.01 of the Revised Code, and "watercraft" includes an
outdrive unit attached to the watercraft.
A lease with a renewal clause and a termination penalty or
similar provision that applies if the renewal clause is not
exercised is presumed to be a sham transaction. In such a case,
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the tax shall be calculated and paid on the basis of the entire
length of the lease period, including any renewal periods, until
the termination penalty or similar provision no longer applies.
The taxpayer shall bear the burden, by a preponderance of the
evidence, that the transaction or series of transactions is not
a sham transaction.
(3) Except as provided in division (A)(2) of this section,
in the case of a sale, the price of which consists in whole or
in part of the lease or rental of tangible personal property,
the tax shall be measured by the installments of that lease or
rental.
(4) In the case of a sale of a physical fitness facility
service or recreation and sports club service, the price of
which consists in whole or in part of a membership for the
receipt of the benefit of the service, the tax applicable to the
sale shall be measured by the installments thereof.
(B) The tax does not apply to the following:
(1) Sales to the state or any of its political
subdivisions, or to any other state or its political
subdivisions if the laws of that state exempt from taxation
sales made to this state and its political subdivisions
including either of the following:
(a) Sales or rentals of tangible personal property by
construction contractors or subcontractors to provide temporary
traffic control or temporary structures, including material and
equipment used to comply with the Ohio manual of uniform traffic
control devices adopted pursuant to section 4511.09 of the
Revised Code, whereby the state or any of its political
subdivisions take title to, or permanent or temporary possession
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of, such tangible personal property for use by the state or any
of its political subdivisions, including for use by the general
public thereof;
(b) Sales of services by construction contractors or
subcontractors to provide temporary traffic control or
structures, including labor used to comply with the Ohio manual
of uniform traffic control devices adopted pursuant to section
4511.09 of the Revised Code, whereby the state or any of its
political subdivisions, including the general public thereof,
receive the benefit of such services.
As used in divisions (B)(1)(a) and (b) of this section,
"temporary structures" include temporary roads, bridges, drains,
and pavement.
(2) Sales of food for human consumption off the premises
where sold;
(3) Sales of food sold to students only in a cafeteria,
dormitory, fraternity, or sorority maintained in a private,
public, or parochial school, college, or university;
(4) Sales of newspapers and sales or transfers of
magazines distributed as controlled circulation publications;
(5) The furnishing, preparing, or serving of meals without
charge by an employer to an employee provided the employer
records the meals as part compensation for services performed or
work done;
(6)(a) Sales of motor fuel upon receipt, use,
distribution, or sale of which in this state a tax is imposed by
the law of this state, but this exemption shall not apply to the
sale of motor fuel on which a refund of the tax is allowable
under division (A) of section 5735.14 of the Revised Code; and
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the tax commissioner may deduct the amount of tax levied by this
section applicable to the price of motor fuel when granting a
refund of motor fuel tax pursuant to division (A) of section
5735.14 of the Revised Code and shall cause the amount deducted
to be paid into the general revenue fund of this state;
(b) Sales of motor fuel other than that described in
division (B)(6)(a) of this section and used for powering a
refrigeration unit on a vehicle other than one used primarily to
provide comfort to the operator or occupants of the vehicle.
(7) Sales of natural gas by a natural gas company or
municipal gas utility, of water by a water-works company, or of
steam by a heating company, if in each case the thing sold is
delivered to consumers through pipes or conduits, and all sales
of communications services by a telegraph company, all terms as
defined in section 5727.01 of the Revised Code, and sales of
electricity delivered through wires;
(8) Casual sales by a person, or auctioneer employed
directly by the person to conduct such sales, except as to such
sales of motor vehicles, watercraft or outboard motors required
to be titled under section 1548.06 of the Revised Code,
watercraft documented with the United States coast guard,
snowmobiles, and all-purpose vehicles as defined in section
4519.01 of the Revised Code;
(9)(a) Sales of services or tangible personal property,
other than motor vehicles, mobile homes, and manufactured homes,
by churches, organizations exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986, or nonprofit
organizations operated exclusively for charitable purposes as
defined in division (B)(12) of this section, provided that the
number of days on which such tangible personal property or
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services, other than items never subject to the tax, are sold
does not exceed six in any calendar year, except as otherwise
provided in division (B)(9)(b) of this section. If the number of
days on which such sales are made exceeds six in any calendar
year, the church or organization shall be considered to be
engaged in business and all subsequent sales by it shall be
subject to the tax. In counting the number of days, all sales by
groups within a church or within an organization shall be
considered to be sales of that church or organization.
(b) The limitation on the number of days on which tax-
exempt sales may be made by a church or organization under
division (B)(9)(a) of this section does not apply to sales made
by student clubs and other groups of students of a primary or
secondary school, or a parent-teacher association, booster
group, or similar organization that raises money to support or
fund curricular or extracurricular activities of a primary or
secondary school.
(c) Divisions (B)(9)(a) and (b) of this section do not
apply to sales by a noncommercial educational radio or
television broadcasting station.
(10) Sales not within the taxing power of this state under
the Constitution or laws of the United States or the
Constitution of this state including either of the following:
(a) Sales or rentals of tangible personal property by
construction contractors or subcontractors to provide temporary
traffic control or temporary structures, including material and
equipment used to comply with the Ohio manual of uniform traffic
control devices adopted pursuant to section 4511.09 of the
Revised Code, whereby the United States takes title to, or
permanent or temporary possession of, such tangible personal
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property for use by the United States including for use by the
general public thereof;
(b) Sales of services by construction contractors or
subcontractors to provide temporary traffic control or
structures, including labor used to comply with the Ohio manual
of uniform traffic control devices adopted pursuant to section
4511.09 of the Revised Code, whereby the United States,
including the general public thereof, receives the benefit of
such services.
As used in divisions (B)(10)(a) and (b) of this section,
"temporary structures" include temporary roads, bridges, drains,
and pavement.
(11) Except for transactions that are sales under division
(B)(3)(p) of section 5739.01 of the Revised Code, the
transportation of persons or property, unless the transportation
is by a private investigation and security service;
(12) Sales of tangible personal property or services to
churches, to organizations exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986, and to any other
nonprofit organizations operated exclusively for charitable
purposes in this state, no part of the net income of which
inures to the benefit of any private shareholder or individual,
and no substantial part of the activities of which consists of
carrying on propaganda or otherwise attempting to influence
legislation; sales to offices administering one or more homes
for the aged or one or more hospital facilities exempt under
section 140.08 of the Revised Code; and sales to organizations
described in division (D) of section 5709.12 of the Revised
Code.
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"Charitable purposes" means the relief of poverty; the
improvement of health through the alleviation of illness,
disease, or injury; the operation of an organization exclusively
for the provision of professional, laundry, printing, and
purchasing services to hospitals or charitable institutions; the
operation of a home for the aged, as defined in section 5701.13
of the Revised Code; the operation of a radio or television
broadcasting station that is licensed by the federal
communications commission as a noncommercial educational radio
or television station; the operation of a nonprofit animal
adoption service or a county humane society; the promotion of
education by an institution of learning that maintains a faculty
of qualified instructors, teaches regular continuous courses of
study, and confers a recognized diploma upon completion of a
specific curriculum; the operation of a parent-teacher
association, booster group, or similar organization primarily
engaged in the promotion and support of the curricular or
extracurricular activities of a primary or secondary school; the
operation of a community or area center in which presentations
in music, dramatics, the arts, and related fields are made in
order to foster public interest and education therein; the
production of performances in music, dramatics, and the arts; or
the promotion of education by an organization engaged in
carrying on research in, or the dissemination of, scientific and
technological knowledge and information primarily for the
public.
Nothing in this division shall be deemed to exempt sales
to any organization for use in the operation or carrying on of a
trade or business, or sales to a home for the aged for use in
the operation of independent living facilities as defined in
division (A) of section 5709.12 of the Revised Code.
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(13) Building and construction materials and services sold
to construction contractors for incorporation into a structure
or improvement to real property under a construction contract
with this state or a political subdivision of this state, or
with the United States government or any of its agencies;
building and construction materials and services sold to
construction contractors for incorporation into a structure or
improvement to real property that are accepted for ownership by
this state or any of its political subdivisions, or by the
United States government or any of its agencies at the time of
completion of the structures or improvements; building and
construction materials sold to construction contractors for
incorporation into a horticulture structure or livestock
structure for a person engaged in the business of horticulture
or producing livestock; building materials and services sold to
a construction contractor for incorporation into a house of
public worship or religious education, or a building used
exclusively for charitable purposes under a construction
contract with an organization whose purpose is as described in
division (B)(12) of this section; building materials and
services sold to a construction contractor for incorporation
into a building under a construction contract with an
organization exempt from taxation under section 501(c)(3) of the
Internal Revenue Code of 1986 when the building is to be used
exclusively for the organization's exempt purposes; tangible
personal property sold for incorporation into the construction
of a sports facility under section 307.696 of the Revised Code;
building and construction materials and services sold to a
construction contractor for incorporation into real property
outside this state if such materials and services, when sold to
a construction contractor in the state in which the real
property is located for incorporation into real property in that
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state, would be exempt from a tax on sales levied by that state;
building and construction materials for incorporation into a
transportation facility pursuant to a public-private agreement
entered into under sections 5501.70 to 5501.83 of the Revised
Code; until one calendar year after the construction of a
convention center that qualifies for property tax exemption
under section 5709.084 of the Revised Code is completed,
building and construction materials and services sold to a
construction contractor for incorporation into the real property
comprising that convention center; and building and construction
materials sold for incorporation into a structure or improvement
to real property that is used primarily as, or primarily in
support of, a manufacturing facility or research and development
facility and that is to be owned by a megaproject operator upon
completion and located at the site of a megaproject that
satisfies the criteria described in division (A)(11)(a)(ii) of
section 122.17 of the Revised Code, provided that the sale
occurs during the period that the megaproject operator has an
agreement for such megaproject with the tax credit authority
under division (D) of section 122.17 of the Revised Code that
remains in effect and has not expired or been terminated.
(14) Sales of ships or vessels or rail rolling stock used
or to be used principally in interstate or foreign commerce, and
repairs, alterations, fuel, and lubricants for such ships or
vessels or rail rolling stock;
(15) Sales to persons primarily engaged in any of the
activities mentioned in division (B)(42)(a), (g), or (h) of this
section, to persons engaged in making retail sales, or to
persons who purchase for sale from a manufacturer tangible
personal property that was produced by the manufacturer in
accordance with specific designs provided by the purchaser, of
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packages, including material, labels, and parts for packages,
and of machinery, equipment, and material for use primarily in
packaging tangible personal property produced for sale,
including any machinery, equipment, and supplies used to make
labels or packages, to prepare packages or products for
labeling, or to label packages or products, by or on the order
of the person doing the packaging, or sold at retail. "Packages"
includes bags, baskets, cartons, crates, boxes, cans, bottles,
bindings, wrappings, and other similar devices and containers,
but does not include motor vehicles or bulk tanks, trailers, or
similar devices attached to motor vehicles. "Packaging" means
placing in a package. Division (B)(15) of this section does not
apply to persons engaged in highway transportation for hire.
(16) Sales of food to persons using supplemental nutrition
assistance program benefits to purchase the food. As used in
this division, "food" has the same meaning as in 7 U.S.C. 2012
and federal regulations adopted pursuant to the Food and
Nutrition Act of 2008.
(17) Sales to persons engaged in farming, agriculture,
horticulture, or floriculture, of tangible personal property for
use or consumption primarily in the production by farming,
agriculture, horticulture, or floriculture of other tangible
personal property for use or consumption primarily in the
production of tangible personal property for sale by farming,
agriculture, horticulture, or floriculture; or material and
parts for incorporation into any such tangible personal property
for use or consumption in production; and of tangible personal
property for such use or consumption in the conditioning or
holding of products produced by and for such use, consumption,
or sale by persons engaged in farming, agriculture,
horticulture, or floriculture, except where such property is
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incorporated into real property;
(18) Sales of drugs for a human being that may be
dispensed only pursuant to a prescription; insulin as recognized
in the official United States pharmacopoeia; urine and blood
testing materials when used by diabetics or persons with
hypoglycemia to test for glucose or acetone; hypodermic syringes
and needles when used by diabetics for insulin injections;
epoetin alfa when purchased for use in the treatment of persons
with medical disease; hospital beds when purchased by hospitals,
nursing homes, or other medical facilities; and medical oxygen
and medical oxygen-dispensing equipment when purchased by
hospitals, nursing homes, or other medical facilities;
(19) Sales of prosthetic devices, durable medical
equipment for home use, or mobility enhancing equipment, when
made pursuant to a prescription and when such devices or
equipment are for use by a human being.
(20) Sales of emergency and fire protection vehicles and
equipment to nonprofit organizations for use solely in providing
fire protection and emergency services, including trauma care
and emergency medical services, for political subdivisions of
the state;
(21) Sales of tangible personal property manufactured in
this state, if sold by the manufacturer in this state to a
retailer for use in the retail business of the retailer outside
of this state and if possession is taken from the manufacturer
by the purchaser within this state for the sole purpose of
immediately removing the same from this state in a vehicle owned
by the purchaser;
(22) Sales of services provided by the state or any of its
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political subdivisions, agencies, instrumentalities,
institutions, or authorities, or by governmental entities of the
state or any of its political subdivisions, agencies,
instrumentalities, institutions, or authorities;
(23) Sales of motor vehicles to nonresidents of this state
under the circumstances described in division (B) of section
5739.029 of the Revised Code;
(24) Sales to persons engaged in the preparation of eggs
for sale of tangible personal property used or consumed directly
in such preparation, including such tangible personal property
used for cleaning, sanitizing, preserving, grading, sorting, and
classifying by size; packages, including material and parts for
packages, and machinery, equipment, and material for use in
packaging eggs for sale; and handling and transportation
equipment and parts therefor, except motor vehicles licensed to
operate on public highways, used in intraplant or interplant
transfers or shipment of eggs in the process of preparation for
sale, when the plant or plants within or between which such
transfers or shipments occur are operated by the same person.
"Packages" includes containers, cases, baskets, flats, fillers,
filler flats, cartons, closure materials, labels, and labeling
materials, and "packaging" means placing therein.
(25)(a) Sales of water to a consumer for residential use;
(b) Sales of water by a nonprofit corporation engaged
exclusively in the treatment, distribution, and sale of water to
consumers, if such water is delivered to consumers through pipes
or tubing.
(26) Fees charged for inspection or reinspection of motor
vehicles under section 3704.14 of the Revised Code;
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(27) Sales to persons licensed to conduct a food service
operation pursuant to section 3717.43 of the Revised Code, of
tangible personal property primarily used directly for the
following:
(a) To prepare food for human consumption for sale;
(b) To preserve food that has been or will be prepared for
human consumption for sale by the food service operator, not
including tangible personal property used to display food for
selection by the consumer;
(c) To clean tangible personal property used to prepare or
serve food for human consumption for sale.
(28) Sales of animals by nonprofit animal adoption
services or county humane societies;
(29) Sales of services to a corporation described in
division (A) of section 5709.72 of the Revised Code, and sales
of tangible personal property that qualifies for exemption from
taxation under section 5709.72 of the Revised Code;
(30) Sales and installation of agricultural land tile, as
defined in division (B)(5)(a) of section 5739.01 of the Revised
Code;
(31) Sales and erection or installation of portable grain
bins, as defined in division (B)(5)(b) of section 5739.01 of the
Revised Code;
(32) The sale, lease, repair, and maintenance of, parts
for, or items attached to or incorporated in, motor vehicles
that are primarily used for transporting tangible personal
property belonging to others by a person engaged in highway
transportation for hire, except for packages and packaging used
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for the transportation of tangible personal property;
(33) Sales to the state headquarters of any veterans'
organization in this state that is either incorporated and
issued a charter by the congress of the United States or is
recognized by the United States veterans administration, for use
by the headquarters;
(34) Sales to a telecommunications service vendor, mobile
telecommunications service vendor, or satellite broadcasting
service vendor of tangible personal property and services used
directly and primarily in transmitting, receiving, switching, or
recording any interactive, one- or two-way electromagnetic
communications, including voice, image, data, and information,
through the use of any medium, including, but not limited to,
poles, wires, cables, switching equipment, computers, and record
storage devices and media, and component parts for the tangible
personal property. The exemption provided in this division shall
be in lieu of all other exemptions under division (B)(42)(a) or
(n) of this section to which the vendor may otherwise be
entitled, based upon the use of the thing purchased in providing
the telecommunications, mobile telecommunications, or satellite
broadcasting service.
(35)(a) Sales where the purpose of the consumer is to use
or consume the things transferred in making retail sales and
consisting of newspaper inserts, catalogues, coupons, flyers,
gift certificates, or other advertising material that prices and
describes tangible personal property offered for retail sale.
(b) Sales to direct marketing vendors of preliminary
materials such as photographs, artwork, and typesetting that
will be used in printing advertising material; and of printed
matter that offers free merchandise or chances to win sweepstake
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prizes and that is mailed to potential customers with
advertising material described in division (B)(35)(a) of this
section;
(c) Sales of equipment such as telephones, computers,
facsimile machines, and similar tangible personal property
primarily used to accept orders for direct marketing retail
sales.
(d) Sales of automatic food vending machines that preserve
food with a shelf life of forty-five days or less by
refrigeration and dispense it to the consumer.
For purposes of division (B)(35) of this section, "direct
marketing" means the method of selling where consumers order
tangible personal property by United States mail, delivery
service, or telecommunication and the vendor delivers or ships
the tangible personal property sold to the consumer from a
warehouse, catalogue distribution center, or similar fulfillment
facility by means of the United States mail, delivery service,
or common carrier.
(36) Sales to a person engaged in the business of
horticulture or producing livestock of materials to be
incorporated into a horticulture structure or livestock
structure;
(37) Sales of personal computers, computer monitors,
computer keyboards, modems, and other peripheral computer
equipment to an individual who is licensed or certified to teach
in an elementary or a secondary school in this state for use by
that individual in preparation for teaching elementary or
secondary school students;
(38) Sales of tangible personal property that is not
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required to be registered or licensed under the laws of this
state to a citizen of a foreign nation that is not a citizen of
the United States, provided the property is delivered to a
person in this state that is not a related member of the
purchaser, is physically present in this state for the sole
purpose of temporary storage and package consolidation, and is
subsequently delivered to the purchaser at a delivery address in
a foreign nation. As used in division (B)(38) of this section,
"related member" has the same meaning as in section 5733.042 of
the Revised Code, and "temporary storage" means the storage of
tangible personal property for a period of not more than sixty
days.
(39) Sales of used manufactured homes and used mobile
homes, as defined in section 5739.0210 of the Revised Code, made
on or after January 1, 2000;
(40) Sales of tangible personal property and services to a
provider of electricity used or consumed directly and primarily
in generating, transmitting, or distributing electricity for use
by others, including property that is or is to be incorporated
into and will become a part of the consumer's production,
transmission, or distribution system and that retains its
classification as tangible personal property after
incorporation; fuel or power used in the production,
transmission, or distribution of electricity; energy conversion
equipment as defined in section 5727.01 of the Revised Code; and
tangible personal property and services used in the repair and
maintenance of the production, transmission, or distribution
system, including only those motor vehicles as are specially
designed and equipped for such use. The exemption provided in
this division shall be in lieu of all other exemptions in
division (B)(42)(a) or (n) of this section to which a provider
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of electricity may otherwise be entitled based on the use of the
tangible personal property or service purchased in generating,
transmitting, or distributing electricity.
(41) Sales to a person providing services under division
(B)(3)(p) of section 5739.01 of the Revised Code of tangible
personal property and services used directly and primarily in
providing taxable services under that section.
(42) Sales where the purpose of the purchaser is to do any
of the following:
(a) To incorporate the thing transferred as a material or
a part into tangible personal property to be produced for sale
by manufacturing, assembling, processing, or refining; or to use
or consume the thing transferred directly in producing tangible
personal property for sale by mining, including, without
limitation, the extraction from the earth of all substances that
are classed geologically as minerals, or directly in the
rendition of a public utility service, except that the sales tax
levied by this section shall be collected upon all meals,
drinks, and food for human consumption sold when transporting
persons. This paragraph does not exempt from "retail sale" or
"sales at retail" the sale of tangible personal property that is
to be incorporated into a structure or improvement to real
property.
(b) To hold the thing transferred as security for the
performance of an obligation of the vendor;
(c) To resell, hold, use, or consume the thing transferred
as evidence of a contract of insurance;
(d) To use or consume the thing directly in commercial
fishing;
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(e) To incorporate the thing transferred as a material or
a part into, or to use or consume the thing transferred directly
in the production of, magazines distributed as controlled
circulation publications;
(f) To use or consume the thing transferred in the
production and preparation in suitable condition for market and
sale of printed, imprinted, overprinted, lithographic,
multilithic, blueprinted, photostatic, or other productions or
reproductions of written or graphic matter;
(g) To use the thing transferred, as described in section
5739.011 of the Revised Code, primarily in a manufacturing
operation to produce tangible personal property for sale;
(h) To use the benefit of a warranty, maintenance or
service contract, or similar agreement, as described in division
(B)(7) of section 5739.01 of the Revised Code, to repair or
maintain tangible personal property, if all of the property that
is the subject of the warranty, contract, or agreement would not
be subject to the tax imposed by this section;
(i) To use the thing transferred as qualified research and
development equipment;
(j) To use or consume the thing transferred primarily in
storing, transporting, mailing, or otherwise handling purchased
sales inventory in a warehouse, distribution center, or similar
facility when the inventory is primarily distributed outside
this state to retail stores of the person who owns or controls
the warehouse, distribution center, or similar facility, to
retail stores of an affiliated group of which that person is a
member, or by means of direct marketing. This division does not
apply to motor vehicles registered for operation on the public
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highways. As used in this division, "affiliated group" has the
same meaning as in division (B)(3)(e) of section 5739.01 of the
Revised Code and "direct marketing" has the same meaning as in
division (B)(35) of this section.
(k) To use or consume the thing transferred to fulfill a
contractual obligation incurred by a warrantor pursuant to a
warranty provided as a part of the price of the tangible
personal property sold or by a vendor of a warranty, maintenance
or service contract, or similar agreement the provision of which
is defined as a sale under division (B)(7) of section 5739.01 of
the Revised Code;
(l) To use or consume the thing transferred in the
production of a newspaper for distribution to the public;
(m) To use tangible personal property to perform a service
listed in division (B)(3) of section 5739.01 of the Revised
Code, if the property is or is to be permanently transferred to
the consumer of the service as an integral part of the
performance of the service;
(n) To use or consume the thing transferred primarily in
producing tangible personal property for sale by farming,
agriculture, horticulture, or floriculture. Persons engaged in
rendering farming, agriculture, horticulture, or floriculture
services for others are deemed engaged primarily in farming,
agriculture, horticulture, or floriculture. This paragraph does
not exempt from "retail sale" or "sales at retail" the sale of
tangible personal property that is to be incorporated into a
structure or improvement to real property.
(o) To use or consume the thing transferred in acquiring,
formatting, editing, storing, and disseminating data or
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information by electronic publishing;
(p) To provide the thing transferred to the owner or
lessee of a motor vehicle that is being repaired or serviced, if
the thing transferred is a rented motor vehicle and the
purchaser is reimbursed for the cost of the rented motor vehicle
by a manufacturer, warrantor, or provider of a maintenance,
service, or other similar contract or agreement, with respect to
the motor vehicle that is being repaired or serviced;
(q) To use or consume the thing transferred directly in
production of crude oil and natural gas for sale. Persons
engaged in rendering production services for others are deemed
engaged in production.
As used in division (B)(42)(q) of this section,
"production" means operations and tangible personal property
directly used to expose and evaluate an underground reservoir
that may contain hydrocarbon resources, prepare the wellbore for
production, and lift and control all substances yielded by the
reservoir to the surface of the earth.
(i) For the purposes of division (B)(42)(q) of this
section, the "thing transferred" includes, but is not limited
to, any of the following:
(I) Services provided in the construction of permanent
access roads, services provided in the construction of the well
site, and services provided in the construction of temporary
impoundments;
(II) Equipment and rigging used for the specific purpose
of creating with integrity a wellbore pathway to underground
reservoirs;
(III) Drilling and workover services used to work within a
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subsurface wellbore, and tangible personal property directly
used in providing such services;
(IV) Casing, tubulars, and float and centralizing
equipment;
(V) Trailers to which production equipment is attached;
(VI) Well completion services, including cementing of
casing, and tangible personal property directly used in
providing such services;
(VII) Wireline evaluation, mud logging, and perforation
services, and tangible personal property directly used in
providing such services;
(VIII) Reservoir stimulation, hydraulic fracturing, and
acidizing services, and tangible personal property directly used
in providing such services, including all material pumped
downhole;
(IX) Pressure pumping equipment;
(X) Artificial lift systems equipment;
(XI) Wellhead equipment and well site equipment used to
separate, stabilize, and control hydrocarbon phases and produced
water;
(XII) Tangible personal property directly used to control
production equipment.
(ii) For the purposes of division (B)(42)(q) of this
section, the "thing transferred" does not include any of the
following:
(I) Tangible personal property used primarily in the
exploration and production of any mineral resource regulated
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under Chapter 1509. of the Revised Code other than oil or gas;
(II) Tangible personal property used primarily in storing,
holding, or delivering solutions or chemicals used in well
stimulation as defined in section 1509.01 of the Revised Code;
(III) Tangible personal property used primarily in
preparing, installing, or reclaiming foundations for drilling or
pumping equipment or well stimulation material tanks;
(IV) Tangible personal property used primarily in
transporting, delivering, or removing equipment to or from the
well site or storing such equipment before its use at the well
site;
(V) Tangible personal property used primarily in gathering
operations occurring off the well site, including gathering
pipelines transporting hydrocarbon gas or liquids away from a
crude oil or natural gas production facility;
(VI) Tangible personal property that is to be incorporated
into a structure or improvement to real property;
(VII) Well site fencing, lighting, or security systems;
(VIII) Communication devices or services;
(IX) Office supplies;
(X) Trailers used as offices or lodging;
(XI) Motor vehicles of any kind;
(XII) Tangible personal property used primarily for the
storage of drilling byproducts and fuel not used for production;
(XIII) Tangible personal property used primarily as a
safety device;
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(XIV) Data collection or monitoring devices;
(XV) Access ladders, stairs, or platforms attached to
storage tanks.
The enumeration of tangible personal property in division
(B)(42)(q)(ii) of this section is not intended to be exhaustive,
and any tangible personal property not so enumerated shall not
necessarily be construed to be a "thing transferred" for the
purposes of division (B)(42)(q) of this section.
The commissioner shall adopt and promulgate rules under
sections 119.01 to 119.13 of the Revised Code that the
commissioner deems necessary to administer division (B)(42)(q)
of this section.
As used in division (B)(42) of this section, "thing"
includes all transactions included in divisions (B)(3)(a), (b),
and (e) of section 5739.01 of the Revised Code.
(43) Sales conducted through a coin operated device that
activates vacuum equipment or equipment that dispenses water,
whether or not in combination with soap or other cleaning agents
or wax, to the consumer for the consumer's use on the premises
in washing, cleaning, or waxing a motor vehicle, provided no
other personal property or personal service is provided as part
of the transaction.
(44) Sales of replacement and modification parts for
engines, airframes, instruments, and interiors in, and paint
for, aircraft used primarily in a fractional aircraft ownership
program, and sales of services for the repair, modification, and
maintenance of such aircraft, and machinery, equipment, and
supplies primarily used to provide those services.
(45) Sales of telecommunications service that is used
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directly and primarily to perform the functions of a call
center. As used in this division, "call center" means any
physical location where telephone calls are placed or received
in high volume for the purpose of making sales, marketing,
customer service, technical support, or other specialized
business activity, and that employs at least fifty individuals
that engage in call center activities on a full-time basis, or
sufficient individuals to fill fifty full-time equivalent
positions.
(46) Sales by a telecommunications service vendor of 900
service to a subscriber. This division does not apply to
information services.
(47) Sales of value-added non-voice data service. This
division does not apply to any similar service that is not
otherwise a telecommunications service.
(48) Sales of feminine hygiene products.
(49) Sales of materials, parts, equipment, or engines used
in the repair or maintenance of aircraft or avionics systems of
such aircraft, and sales of repair, remodeling, replacement, or
maintenance services in this state performed on aircraft or on
an aircraft's avionics, engine, or component materials or parts.
As used in division (B)(49) of this section, "aircraft" means
aircraft of more than six thousand pounds maximum certified
takeoff weight or used exclusively in general aviation.
(50) Sales of full flight simulators that are used for
pilot or flight-crew training, sales of repair or replacement
parts or components, and sales of repair or maintenance services
for such full flight simulators. "Full flight simulator" means a
replica of a specific type, or make, model, and series of
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aircraft cockpit. It includes the assemblage of equipment and
computer programs necessary to represent aircraft operations in
ground and flight conditions, a visual system providing an out-
of-the-cockpit view, and a system that provides cues at least
equivalent to those of a three-degree-of-freedom motion system,
and has the full range of capabilities of the systems installed
in the device as described in appendices A and B of part 60 of
chapter 1 of title 14 of the Code of Federal Regulations.
(51) Any transfer or lease of tangible personal property
between the state and JobsOhio in accordance with section
4313.02 of the Revised Code.
(52)(a) Sales to a qualifying corporation.
(b) As used in division (B)(52) of this section:
(i) "Qualifying corporation" means a nonprofit corporation
organized in this state that leases from an eligible county
land, buildings, structures, fixtures, and improvements to the
land that are part of or used in a public recreational facility
used by a major league professional athletic team or a class A
to class AAA minor league affiliate of a major league
professional athletic team for a significant portion of the
team's home schedule, provided the following apply:
(I) The facility is leased from the eligible county
pursuant to a lease that requires substantially all of the
revenue from the operation of the business or activity conducted
by the nonprofit corporation at the facility in excess of
operating costs, capital expenditures, and reserves to be paid
to the eligible county at least once per calendar year.
(II) Upon dissolution and liquidation of the nonprofit
corporation, all of its net assets are distributable to the
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board of commissioners of the eligible county from which the
corporation leases the facility.
(ii) "Eligible county" has the same meaning as in section
307.695 of the Revised Code.
(53) Sales to or by a cable service provider, video
service provider, or radio or television broadcast station
regulated by the federal government of cable service or
programming, video service or programming, audio service or
programming, or electronically transferred digital audiovisual
or audio work. As used in division (B)(53) of this section,
"cable service" and "cable service provider" have the same
meanings as in section 1332.01 of the Revised Code, and "video
service," "video service provider," and "video programming" have
the same meanings as in section 1332.21 of the Revised Code.
(54) Sales of a digital audio work electronically
transferred for delivery through use of a machine, such as a
juke box, that does all of the following:
(a) Accepts direct payments to operate;
(b) Automatically plays a selected digital audio work for
a single play upon receipt of a payment described in division
(B)(54)(a) of this section;
(c) Operates exclusively for the purpose of playing
digital audio works in a commercial establishment.
(55)(a) Sales of the following occurring on the first
Friday of August and the following Saturday and Sunday of any
year, except in 2024 or any subsequent year in which a sales tax
holiday is held pursuant to section 5739.41 of the Revised Code:
(i) An item of clothing, the price of which is seventy-
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781 H. B. No. 87 Page 28
As Introduced
five dollars or less;
(ii) An item of school supplies, the price of which is
twenty dollars or less;
(iii) An item of school instructional material, the price
of which is twenty dollars or less.
(b) As used in division (B)(55) of this section:
(i) "Clothing" means all human wearing apparel suitable
for general use. "Clothing" includes, but is not limited to,
aprons, household and shop; athletic supporters; baby receiving
blankets; bathing suits and caps; beach capes and coats; belts
and suspenders; boots; coats and jackets; costumes; diapers,
children and adult, including disposable diapers; earmuffs;
footlets; formal wear; garters and garter belts; girdles; gloves
and mittens for general use; hats and caps; hosiery; insoles for
shoes; lab coats; neckties; overshoes; pantyhose; rainwear;
rubber pants; sandals; scarves; shoes and shoe laces; slippers;
sneakers; socks and stockings; steel-toed shoes; underwear;
uniforms, athletic and nonathletic; and wedding apparel.
"Clothing" does not include items purchased for use in a trade
or business; clothing accessories or equipment; protective
equipment; sports or recreational equipment; belt buckles sold
separately; costume masks sold separately; patches and emblems
sold separately; sewing equipment and supplies including, but
not limited to, knitting needles, patterns, pins, scissors,
sewing machines, sewing needles, tape measures, and thimbles;
and sewing materials that become part of "clothing" including,
but not limited to, buttons, fabric, lace, thread, yarn, and
zippers.
(ii) "School supplies" means items commonly used by a
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As Introduced
student in a course of study. "School supplies" includes only
the following items: binders; book bags; calculators; cellophane
tape; blackboard chalk; compasses; composition books; crayons;
erasers; folders, expandable, pocket, plastic, and manila; glue,
paste, and paste sticks; highlighters; index cards; index card
boxes; legal pads; lunch boxes; markers; notebooks; paper,
loose-leaf ruled notebook paper, copy paper, graph paper,
tracing paper, manila paper, colored paper, poster board, and
construction paper; pencil boxes and other school supply boxes;
pencil sharpeners; pencils; pens; protractors; rulers; scissors;
and writing tablets. "School supplies" does not include any item
purchased for use in a trade or business.
(iii) "School instructional material" means written
material commonly used by a student in a course of study as a
reference and to learn the subject being taught. "School
instructional material" includes only the following items:
reference books, reference maps and globes, textbooks, and
workbooks. "School instructional material" does not include any
material purchased for use in a trade or business.
(56)(a) Sales of adult diapers or incontinence underpads
sold pursuant to a prescription, for the benefit of a medicaid
recipient with a diagnosis of incontinence, and by a medicaid
provider that maintains a valid provider agreement under section
5164.30 of the Revised Code with the department of medicaid,
provided that the medicaid program covers diapers or
incontinence underpads as an incontinence garment.
(b) As used in division (B)(56)(a) of this section,
"incontinence underpad" means an absorbent product, not worn on
the body, designed to protect furniture or other tangible
personal property from soiling or damage due to human
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840 H. B. No. 87 Page 30
As Introduced
incontinence.
(57) Sales of investment metal bullion and investment
coins. "Investment metal bullion" means any bullion described in
section 408(m)(3)(B) of the Internal Revenue Code, regardless of
whether that bullion is in the physical possession of a trustee.
"Investment coin" means any coin composed primarily of gold,
silver, platinum, or palladium.
(58) Sales of tangible personal property used primarily
for any of the following purposes by a megaproject operator at
the site of a megaproject that satisfies the criteria described
in division (A)(11)(a)(ii) of section 122.17 of the Revised
Code, provided that the sale occurs during the period that the
megaproject operator has an agreement for such megaproject with
the tax credit authority under division (D) of section 122.17 of
the Revised Code that remains in effect and has not expired or
been terminated:
(a) To store, transmit, convey, distribute, recycle,
circulate, or clean water, steam, or other gases used in or
produced as a result of manufacturing activity, including items
that support or aid in the operation of such property;
(b) To clean or prepare inventory, at any stage of storage
or production, or equipment used in a manufacturing activity,
including chemicals, solvents, catalysts, soaps, and other items
that support or aid in the operation of property;
(c) To regulate, treat, filter, condition, improve, clean,
maintain, or monitor environmental conditions within areas where
manufacturing activities take place;
(d) To handle, transport, or convey inventory during
production or manufacturing.
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869 H. B. No. 87 Page 31
As Introduced
(59) Documentary services charges imposed pursuant to
section 4517.261 or 4781.24 of the Revised Code.
(60) Sales of the following child care items:
(a) Infant clothing and children's diapers.
(61) Sales of therapeutic ;
(b) Therapeutic or preventative creams and wipes marketed
primarily for use on the skin of children .
(62) Sales of a ;
(c) Pacifiers, teething rings, and similar items;
(d) A child restraint device or booster seat that meets
the national highway traffic safety administration standard for
child restraint systems under 49 C.F.R. 571.213 .
(63) Sales of cribs ;
(e) Cribs and bassinets intended to provide sleeping
accommodations for children that comply with the United States
consumer product safety commission's safety standard for full-
size baby cribs under 16 C.F.R. 1219 or the commission's safety
standard for , non-full-size baby cribs under 16 C.F.R. 1220 . ,
or bassinets under 16 C.F.R. 1218, along with sheets and
blankets designed and marketed for use with the same;
(f) Play yards that comply with the United States consumer
product safety commission's safety standard under 16 C.F.R.
1221;
(64) Sales of strollers (g) Strollers meant for
transporting children from infancy to about thirty-six months of
age that meet the United States consumer product safety
commission safety standard for carriages and strollers under 16
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As Introduced
C.F.R. 1227.2;
(h) Breastfeeding items, including breast pumps, breast
pump collection and storage supplies, breast pump kits, breast
pump parts, burping cloths, and baby bottles;
(i) Baby monitors;
(j) Toys labeled as appropriate for infants .
As used in division (B)(60) of this section, "infant"
means an individual aged 12 months or younger.
(65)(61) The fee imposed by section 3743.22 of the Revised
Code, if it is separately stated on the invoice, bill of sale,
or similar document given by the vendor to the consumer for a
retail sale made in this state.
(66)(62) Sales of eligible tangible personal property
occurring during the period of a sales tax holiday held pursuant
to section 5739.41 of the Revised Code.
(C) For the purpose of the proper administration of this
chapter, and to prevent the evasion of the tax, it is presumed
that all sales made in this state are subject to the tax until
the contrary is established.
(D) The tax collected by the vendor from the consumer
under this chapter is not part of the price, but is a tax
collection for the benefit of the state, and of counties levying
an additional sales tax pursuant to section 5739.021 or 5739.026
of the Revised Code and of transit authorities levying an
additional sales tax pursuant to section 5739.023 of the Revised
Code. Except for the discount authorized under section 5739.12
of the Revised Code and the effects of any rounding pursuant to
section 5703.055 of the Revised Code, no person other than the
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As Introduced
state or such a county or transit authority shall derive any
benefit from the collection or payment of the tax levied by this
section or section 5739.021, 5739.023, or 5739.026 of the
Revised Code.
Sec. 5747.01. Except as otherwise expressly provided or
clearly appearing from the context, any term used in this
chapter that is not otherwise defined in this section has the
same meaning as when used in a comparable context in the laws of
the United States relating to federal income taxes or if not
used in a comparable context in those laws, has the same meaning
as in section 5733.40 of the Revised Code. Any reference in this
chapter to the Internal Revenue Code includes other laws of the
United States relating to federal income taxes.
As used in this chapter:
(A) "Adjusted gross income" or "Ohio adjusted gross
income" means federal adjusted gross income, as defined and used
in the Internal Revenue Code, adjusted as provided in this
section:
(1) Add interest or dividends on obligations or securities
of any state or of any political subdivision or authority of any
state, other than this state and its subdivisions and
authorities.
(2) Add interest or dividends on obligations of any
authority, commission, instrumentality, territory, or possession
of the United States to the extent that the interest or
dividends are exempt from federal income taxes but not from
state income taxes.
(3) Deduct interest or dividends on obligations of the
United States and its territories and possessions or of any
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authority, commission, or instrumentality of the United States
to the extent that the interest or dividends are included in
federal adjusted gross income but exempt from state income taxes
under the laws of the United States.
(4) Deduct disability and survivor's benefits to the
extent included in federal adjusted gross income.
(5) Deduct the following, to the extent not otherwise
deducted or excluded in computing federal or Ohio adjusted gross
income:
(a) Benefits under Title II of the Social Security Act and
tier 1 railroad retirement;
(b) Railroad retirement benefits, other than tier 1
railroad retirement benefits, to the extent such amounts are
exempt from state taxation under federal law.
(6) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal adjusted gross
income for the taxable year, had the work opportunity tax credit
allowed and determined under sections 38, 51, and 52 of the
Internal Revenue Code not been in effect.
(7) Deduct any interest or interest equivalent on public
obligations and purchase obligations to the extent that the
interest or interest equivalent is included in federal adjusted
gross income.
(8) Add any loss or deduct any gain resulting from the
sale, exchange, or other disposition of public obligations to
the extent that the loss has been deducted or the gain has been
included in computing federal adjusted gross income.
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(9) Deduct or add amounts, as provided under section
5747.70 of the Revised Code, related to contributions made to or
tuition units purchased under a qualified tuition program
established pursuant to section 529 of the Internal Revenue
Code.
(10)(a) Deduct, to the extent not otherwise allowable as a
deduction or exclusion in computing federal or Ohio adjusted
gross income for the taxable year, the amount the taxpayer paid
during the taxable year for medical care insurance and qualified
long-term care insurance for the taxpayer, the taxpayer's
spouse, and dependents. No deduction for medical care insurance
under division (A)(10)(a) of this section shall be allowed
either to any taxpayer who is eligible to participate in any
subsidized health plan maintained by any employer of the
taxpayer or of the taxpayer's spouse, or to any taxpayer who is
entitled to, or on application would be entitled to, benefits
under part A of Title XVIII of the "Social Security Act," 49
Stat. 620 (1935), 42 U.S.C. 301, as amended. For the purposes of
division (A)(10)(a) of this section, "subsidized health plan"
means a health plan for which the employer pays any portion of
the plan's cost. The deduction allowed under division (A)(10)(a)
of this section shall be the net of any related premium refunds,
related premium reimbursements, or related insurance premium
dividends received during the taxable year.
(b) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income
during the taxable year, the amount the taxpayer paid during the
taxable year, not compensated for by any insurance or otherwise,
for medical care of the taxpayer, the taxpayer's spouse, and
dependents, to the extent the expenses exceed seven and one-half
per cent of the taxpayer's federal adjusted gross income.
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(c) For purposes of division (A)(10) of this section,
"medical care" has the meaning given in section 213 of the
Internal Revenue Code, subject to the special rules,
limitations, and exclusions set forth therein, and "qualified
long-term care" has the same meaning given in section 7702B(c)
of the Internal Revenue Code. Solely for purposes of division
(A)(10)(a) of this section, "dependent" includes a person who
otherwise would be a "qualifying relative" and thus a
"dependent" under section 152 of the Internal Revenue Code but
for the fact that the person fails to meet the income and
support limitations under section 152(d)(1)(B) and (C) of the
Internal Revenue Code.
(11)(a) Deduct any amount included in federal adjusted
gross income solely because the amount represents a
reimbursement or refund of expenses that in any year the
taxpayer had deducted as an itemized deduction pursuant to
section 63 of the Internal Revenue Code and applicable United
States department of the treasury regulations. The deduction
otherwise allowed under division (A)(11)(a) of this section
shall be reduced to the extent the reimbursement is attributable
to an amount the taxpayer deducted under this section in any
taxable year.
(b) Add any amount not otherwise included in Ohio adjusted
gross income for any taxable year to the extent that the amount
is attributable to the recovery during the taxable year of any
amount deducted or excluded in computing federal or Ohio
adjusted gross income in any taxable year.
(12) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
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As Introduced
meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's adjusted gross income for a prior
taxable year and did not qualify for a credit under division (A)
or (B) of section 5747.05 of the Revised Code for that year;
(b) It does not otherwise reduce the taxpayer's adjusted
gross income for the current or any other taxable year.
(13) Deduct an amount equal to the deposits made to, and
net investment earnings of, a medical savings account during the
taxable year, in accordance with section 3924.66 of the Revised
Code. The deduction allowed by division (A)(13) of this section
does not apply to medical savings account deposits and earnings
otherwise deducted or excluded for the current or any other
taxable year from the taxpayer's federal adjusted gross income.
(14)(a) Add an amount equal to the funds withdrawn from a
medical savings account during the taxable year, and the net
investment earnings on those funds, when the funds withdrawn
were used for any purpose other than to reimburse an account
holder for, or to pay, eligible medical expenses, in accordance
with section 3924.66 of the Revised Code;
(b) Add the amounts distributed from a medical savings
account under division (A)(2) of section 3924.68 of the Revised
Code during the taxable year.
(15) Add any amount claimed as a credit under section
5747.059 of the Revised Code to the extent that such amount
satisfies either of the following:
(a) The amount was deducted or excluded from the
computation of the taxpayer's federal adjusted gross income as
required to be reported for the taxpayer's taxable year under
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1071 H. B. No. 87 Page 38
As Introduced
the Internal Revenue Code;
(b) The amount resulted in a reduction of the taxpayer's
federal adjusted gross income as required to be reported for any
of the taxpayer's taxable years under the Internal Revenue Code.
(16) Deduct the amount contributed by the taxpayer to an
individual development account program established by a county
department of job and family services pursuant to sections
329.11 to 329.14 of the Revised Code for the purpose of matching
funds deposited by program participants. On request of the tax
commissioner, the taxpayer shall provide any information that,
in the tax commissioner's opinion, is necessary to establish the
amount deducted under division (A)(16) of this section.
(17)(a)(i) Subject to divisions (A)(17)(a)(iii), (iv), and
(v) of this section, add five-sixths of the amount of
depreciation expense allowed by subsection (k) of section 168 of
the Internal Revenue Code, including the taxpayer's
proportionate or distributive share of the amount of
depreciation expense allowed by that subsection to a pass-
through entity in which the taxpayer has a direct or indirect
ownership interest.
(ii) Subject to divisions (A)(17)(a)(iii), (iv), and (v)
of this section, add five-sixths of the amount of qualifying
section 179 depreciation expense, including the taxpayer's
proportionate or distributive share of the amount of qualifying
section 179 depreciation expense allowed to any pass-through
entity in which the taxpayer has a direct or indirect ownership
interest.
(iii) Subject to division (A)(17)(a)(v) of this section,
for taxable years beginning in 2012 or thereafter, if the
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1100 H. B. No. 87 Page 39
As Introduced
increase in income taxes withheld by the taxpayer is equal to or
greater than ten per cent of income taxes withheld by the
taxpayer during the taxpayer's immediately preceding taxable
year, "two-thirds" shall be substituted for "five-sixths" for
the purpose of divisions (A)(17)(a)(i) and (ii) of this section.
(iv) Subject to division (A)(17)(a)(v) of this section,
for taxable years beginning in 2012 or thereafter, a taxpayer is
not required to add an amount under division (A)(17) of this
section if the increase in income taxes withheld by the taxpayer
and by any pass-through entity in which the taxpayer has a
direct or indirect ownership interest is equal to or greater
than the sum of (I) the amount of qualifying section 179
depreciation expense and (II) the amount of depreciation expense
allowed to the taxpayer by subsection (k) of section 168 of the
Internal Revenue Code, and including the taxpayer's
proportionate or distributive shares of such amounts allowed to
any such pass-through entities.
(v) If a taxpayer directly or indirectly incurs a net
operating loss for the taxable year for federal income tax
purposes, to the extent such loss resulted from depreciation
expense allowed by subsection (k) of section 168 of the Internal
Revenue Code and by qualifying section 179 depreciation expense,
"the entire" shall be substituted for "five-sixths of the" for
the purpose of divisions (A)(17)(a)(i) and (ii) of this section.
The tax commissioner, under procedures established by the
commissioner, may waive the add-backs related to a pass-through
entity if the taxpayer owns, directly or indirectly, less than
five per cent of the pass-through entity.
(b) Nothing in division (A)(17) of this section shall be
construed to adjust or modify the adjusted basis of any asset.
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1130 H. B. No. 87 Page 40
As Introduced
(c) To the extent the add-back required under division (A)
(17)(a) of this section is attributable to property generating
nonbusiness income or loss allocated under section 5747.20 of
the Revised Code, the add-back shall be sitused to the same
location as the nonbusiness income or loss generated by the
property for the purpose of determining the credit under
division (A) of section 5747.05 of the Revised Code. Otherwise,
the add-back shall be apportioned, subject to one or more of the
four alternative methods of apportionment enumerated in section
5747.21 of the Revised Code.
(d) For the purposes of division (A)(17)(a)(v) of this
section, net operating loss carryback and carryforward shall not
include the allowance of any net operating loss deduction
carryback or carryforward to the taxable year to the extent such
loss resulted from depreciation allowed by section 168(k) of the
Internal Revenue Code and by the qualifying section 179
depreciation expense amount.
(e) For the purposes of divisions (A)(17) and (18) of this
section:
(i) "Income taxes withheld" means the total amount
withheld and remitted under sections 5747.06 and 5747.07 of the
Revised Code by an employer during the employer's taxable year.
(ii) "Increase in income taxes withheld" means the amount
by which the amount of income taxes withheld by an employer
during the employer's current taxable year exceeds the amount of
income taxes withheld by that employer during the employer's
immediately preceding taxable year.
(iii) "Qualifying section 179 depreciation expense" means
the difference between (I) the amount of depreciation expense
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1159 H. B. No. 87 Page 41
As Introduced
directly or indirectly allowed to a taxpayer under section 179
of the Internal Revised Code, and (II) the amount of
depreciation expense directly or indirectly allowed to the
taxpayer under section 179 of the Internal Revenue Code as that
section existed on December 31, 2002.
(18)(a) If the taxpayer was required to add an amount
under division (A)(17)(a) of this section for a taxable year,
deduct one of the following:
(i) One-fifth of the amount so added for each of the five
succeeding taxable years if the amount so added was five-sixths
of qualifying section 179 depreciation expense or depreciation
expense allowed by subsection (k) of section 168 of the Internal
Revenue Code;
(ii) One-half of the amount so added for each of the two
succeeding taxable years if the amount so added was two-thirds
of such depreciation expense;
(iii) One-sixth of the amount so added for each of the six
succeeding taxable years if the entire amount of such
depreciation expense was so added.
(b) If the amount deducted under division (A)(18)(a) of
this section is attributable to an add-back allocated under
division (A)(17)(c) of this section, the amount deducted shall
be sitused to the same location. Otherwise, the add-back shall
be apportioned using the apportionment factors for the taxable
year in which the deduction is taken, subject to one or more of
the four alternative methods of apportionment enumerated in
section 5747.21 of the Revised Code.
(c) No deduction is available under division (A)(18)(a) of
this section with regard to any depreciation allowed by section
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1188 H. B. No. 87 Page 42
As Introduced
168(k) of the Internal Revenue Code and by the qualifying
section 179 depreciation expense amount to the extent that such
depreciation results in or increases a federal net operating
loss carryback or carryforward. If no such deduction is
available for a taxable year, the taxpayer may carry forward the
amount not deducted in such taxable year to the next taxable
year and add that amount to any deduction otherwise available
under division (A)(18)(a) of this section for that next taxable
year. The carryforward of amounts not so deducted shall continue
until the entire addition required by division (A)(17)(a) of
this section has been deducted.
(19) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year as reimbursement for life insurance premiums under
section 5919.31 of the Revised Code.
(20) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year as a death benefit paid by the adjutant general
under section 5919.33 of the Revised Code.
(21) Deduct, to the extent included in federal adjusted
gross income and not otherwise allowable as a deduction or
exclusion in computing federal or Ohio adjusted gross income for
the taxable year, military pay and allowances received by the
taxpayer during the taxable year for active duty service in the
United States army, air force, navy, marine corps, or coast
guard or reserve components thereof or the national guard. The
deduction may not be claimed for military pay and allowances
received by the taxpayer while the taxpayer is stationed in this
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1218 H. B. No. 87 Page 43
As Introduced
state.
(22) Deduct, to the extent not otherwise allowable as a
deduction or exclusion in computing federal or Ohio adjusted
gross income for the taxable year and not otherwise compensated
for by any other source, the amount of qualified organ donation
expenses incurred by the taxpayer during the taxable year, not
to exceed ten thousand dollars. A taxpayer may deduct qualified
organ donation expenses only once for all taxable years
beginning with taxable years beginning in 2007.
For the purposes of division (A)(22) of this section:
(a) "Human organ" means all or any portion of a human
liver, pancreas, kidney, intestine, or lung, and any portion of
human bone marrow.
(b) "Qualified organ donation expenses" means travel
expenses, lodging expenses, and wages and salary forgone by a
taxpayer in connection with the taxpayer's donation, while
living, of one or more of the taxpayer's human organs to another
human being.
(23) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, amounts received by the taxpayer as retired
personnel pay for service in the uniformed services or reserve
components thereof, or the national guard, or received by the
surviving spouse or former spouse of such a taxpayer under the
survivor benefit plan on account of such a taxpayer's death. If
the taxpayer receives income on account of retirement paid under
the federal civil service retirement system or federal employees
retirement system, or under any successor retirement program
enacted by the congress of the United States that is established
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1247 H. B. No. 87 Page 44
As Introduced
and maintained for retired employees of the United States
government, and such retirement income is based, in whole or in
part, on credit for the taxpayer's uniformed service, the
deduction allowed under this division shall include only that
portion of such retirement income that is attributable to the
taxpayer's uniformed service, to the extent that portion of such
retirement income is otherwise included in federal adjusted
gross income and is not otherwise deducted under this section.
Any amount deducted under division (A)(23) of this section is
not included in a taxpayer's adjusted gross income for the
purposes of section 5747.055 of the Revised Code. No amount may
be deducted under division (A)(23) of this section on the basis
of which a credit was claimed under section 5747.055 of the
Revised Code.
(24) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year from the military injury relief fund created in
section 5902.05 of the Revised Code.
(25) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received as a veterans
bonus during the taxable year from the Ohio department of
veterans services as authorized by Section 2r of Article VIII,
Ohio Constitution.
(26) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, any income derived from a transfer agreement
or from the enterprise transferred under that agreement under
section 4313.02 of the Revised Code.
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1277 H. B. No. 87 Page 45
As Introduced
(27) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, Ohio college opportunity or federal Pell grant
amounts received by the taxpayer or the taxpayer's spouse or
dependent pursuant to section 3333.122 of the Revised Code or 20
U.S.C. 1070a, et seq., and used to pay room or board furnished
by the educational institution for which the grant was awarded
at the institution's facilities, including meal plans
administered by the institution. For the purposes of this
division, receipt of a grant includes the distribution of a
grant directly to an educational institution and the crediting
of the grant to the enrollee's account with the institution.
(28) Deduct from the portion of an individual's federal
adjusted gross income that is business income, to the extent not
otherwise deducted or excluded in computing federal adjusted
gross income for the taxable year, one hundred twenty-five
thousand dollars for each spouse if spouses file separate
returns under section 5747.08 of the Revised Code or two hundred
fifty thousand dollars for all other individuals.
(29) Deduct, as provided under section 5747.78 of the
Revised Code, contributions to ABLE savings accounts made in
accordance with sections 113.50 to 113.56 of the Revised Code.
(30)(a) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income
during the taxable year, all of the following:
(i) Compensation paid to a qualifying employee described
in division (A)(14)(a) of section 5703.94 of the Revised Code to
the extent such compensation is for disaster work conducted in
this state during a disaster response period pursuant to a
qualifying solicitation received by the employee's employer;
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1307 H. B. No. 87 Page 46
As Introduced
(ii) Compensation paid to a qualifying employee described
in division (A)(14)(b) of section 5703.94 of the Revised Code to
the extent such compensation is for disaster work conducted in
this state by the employee during the disaster response period
on critical infrastructure owned or used by the employee's
employer;
(iii) Income received by an out-of-state disaster business
for disaster work conducted in this state during a disaster
response period, or, if the out-of-state disaster business is a
pass-through entity, a taxpayer's distributive share of the
pass-through entity's income from the business conducting
disaster work in this state during a disaster response period,
if, in either case, the disaster work is conducted pursuant to a
qualifying solicitation received by the business.
(b) All terms used in division (A)(30) of this section
have the same meanings as in section 5703.94 of the Revised
Code.
(31) For a taxpayer who is a qualifying Ohio educator,
deduct, to the extent not otherwise deducted or excluded in
computing federal or Ohio adjusted gross income for the taxable
year, the lesser of two hundred fifty dollars or the amount of
expenses described in subsections (a)(2)(D)(i) and (ii) of
section 62 of the Internal Revenue Code paid or incurred by the
taxpayer during the taxpayer's taxable year in excess of the
amount the taxpayer is authorized to deduct for that taxable
year under subsection (a)(2)(D) of that section.
(32) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, amounts received by the taxpayer as a
disability severance payment, computed under 10 U.S.C. 1212,
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As Introduced
following discharge or release under honorable conditions from
the armed forces of the United States, as defined in section
5907.01 of the Revised Code.
(33) Deduct, to the extent not otherwise deducted or
excluded in computing federal adjusted gross income or Ohio
adjusted gross income, amounts not subject to tax due to an
agreement entered into under division (A)(2) of section 5747.05
of the Revised Code.
(34) Deduct amounts as provided under section 5747.79 of
the Revised Code related to the taxpayer's qualifying capital
gains and deductible payroll.
To the extent a qualifying capital gain described under
division (A)(34) of this section is business income, the
taxpayer shall deduct those gains under this division before
deducting any such gains under division (A)(28) of this section.
(35)(a) For taxable years beginning in or after 2026,
deduct, to the extent not otherwise deducted or excluded in
computing federal or Ohio adjusted gross income for the taxable
year:
(i) One hundred per cent of the capital gain received by
the taxpayer in the taxable year from a qualifying interest in
an Ohio venture capital operating company attributable to the
company's investments in Ohio businesses during the period for
which the company was an Ohio venture operating company; and
(ii) Fifty per cent of the capital gain received by the
taxpayer in the taxable year from a qualifying interest in an
Ohio venture capital operating company attributable to the
company's investments in all other businesses during the period
for which the company was an Ohio venture operating company.
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As Introduced
(b) Add amounts previously deducted by the taxpayer under
division (A)(35)(a) of this section if the director of
development certifies to the tax commissioner that the
requirements for the deduction were not met.
(c) All terms used in division (A)(35) of this section
have the same meanings as in section 122.851 of the Revised
Code.
(d) To the extent a capital gain described in division (A)
(35)(a) of this section is business income, the taxpayer shall
apply that division before applying division (A)(28) of this
section.
(36) Add, to the extent not otherwise included in
computing federal or Ohio adjusted gross income for any taxable
year, the taxpayer's proportionate share of the amount of the
tax levied under section 5747.38 of the Revised Code and paid by
an electing pass-through entity for the taxable year.
Notwithstanding any provision of the Revised Code to the
contrary, the portion of the addition required by division (A)
(36) of this section related to the apportioned business income
of the pass-through entity shall be considered business income
under division (B) of this section. Such addition is eligible
for the deduction in division (A)(28) of this section, subject
to the applicable dollar limitations, and the tax rate
prescribed by division (A)(4)(a) of section 5747.02 of the
Revised Code. The taxpayer shall provide, upon request of the
tax commissioner, any documentation necessary to verify the
portion of the addition that is business income under this
division.
(37) Deduct, to the extent not otherwise deducted or
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As Introduced
excluded in computing federal or Ohio adjusted gross income for
the taxable year, amounts delivered to a qualifying institution
pursuant to section 3333.128 of the Revised Code for the benefit
of the taxpayer or the taxpayer's spouse or dependent.
(38) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, amounts received under the Ohio adoption grant
program pursuant to section 5101.191 of the Revised Code.
(39) Deduct, to the extent included in federal adjusted
gross income, income attributable to amounts provided to a
taxpayer for any of the purposes for which an exclusion would
have been authorized under section 139 of the Internal Revenue
Code if the train derailment near the city of East Palestine on
February 3, 2023, had been a qualified disaster pursuant to that
section, or to compensate for lost business resulting from that
derailment, if such amounts are provided by any of the
following:
(a) A federal, state, or local government agency;
(b) A railroad company, as that term is defined in section
5727.01 of the Revised Code;
(c) Any subsidiary, insurer, or agent of a railroad
company or any related person.
Notwithstanding any provision to the contrary, the
derailment is not required to meet the definition of a
"qualified disaster" pursuant to section 139 of the Internal
Revenue Code to qualify for the deduction under this section.
(40) Deduct, to the extent included in federal adjusted
gross income, income attributable to loan repayments on behalf
of the taxpayer under the rural practice incentive program under
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1424 H. B. No. 87 Page 50
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section 3333.135 of the Revised Code.
(41) Add any income taxes deducted in computing federal or
Ohio adjusted gross income to the extent the income taxes were
derived from income subject to a tax levied in another state or
the District of Columbia when such tax was enacted for purposes
of complying with internal revenue service notice 2020-75.
Notwithstanding any provision of the Revised Code to the
contrary, the portion of the addition required by division (A)
(41) of this section related to the apportioned business income
of the pass-through entity shall be considered business income
under division (B) of this section. Such addition is eligible
for the deduction in division (A)(28) of this section, subject
to the applicable dollar limitations, and the tax rate
prescribed by division (A)(4)(a) of section 5747.02 of the
Revised Code. The taxpayer shall provide, upon request of the
tax commissioner, any documentation necessary to verify the
portion of the addition that is business income under this
division.
(42) Deduct amounts contributed to a homeownership savings
account and calculated pursuant to divisions (B) and (C) of
section 5747.85 of the Revised Code.
(43) If the taxpayer is the account owner, add the amount
of funds withdrawn from a homeownership savings account not used
for eligible expenses, regardless of who deposited those funds.
As used in division (A)(43) of this section, "homeownership
savings account," "account owner," and "eligible expenses" have
the same meanings as in section 5747.85 of the Revised Code.
(B) "Business income" means income, including gain or
loss, arising from transactions, activities, and sources in the
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1453 H. B. No. 87 Page 51
As Introduced
regular course of a trade or business and includes income, gain,
or loss from real property, tangible property, and intangible
property if the acquisition, rental, management, and disposition
of the property constitute integral parts of the regular course
of a trade or business operation. "Business income" includes
income, including gain or loss, from a partial or complete
liquidation of a business, including, but not limited to, gain
or loss from the sale or other disposition of goodwill or the
sale of an equity or ownership interest in a business.
As used in this division, the "sale of an equity or
ownership interest in a business" means sales to which either or
both of the following apply:
(1) The sale is treated for federal income tax purposes as
the sale of assets.
(2) The seller materially participated, as described in 26
C.F.R. 1.469-5T, in the activities of the business during the
taxable year in which the sale occurs or during any of the five
preceding taxable years.
(C) "Nonbusiness income" means all income other than
business income and may include, but is not limited to,
compensation, rents and royalties from real or tangible personal
property, capital gains, interest, dividends and distributions,
patent or copyright royalties, or lottery winnings, prizes, and
awards.
(D) "Compensation" means any form of remuneration paid to
an employee for personal services.
(E) "Fiduciary" means a guardian, trustee, executor,
administrator, receiver, conservator, or any other person acting
in any fiduciary capacity for any individual, trust, or estate.
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(F) "Fiscal year" means an accounting period of twelve
months ending on the last day of any month other than December.
(G) "Individual" means any natural person.
(H) "Internal Revenue Code" means the "Internal Revenue
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.
(I) "Resident" means any of the following:
(1) An individual who is domiciled in this state, subject
to section 5747.24 of the Revised Code;
(2) The estate of a decedent who at the time of death was
domiciled in this state. The domicile tests of section 5747.24
of the Revised Code are not controlling for purposes of division
(I)(2) of this section.
(3) A trust that, in whole or part, resides in this state.
If only part of a trust resides in this state, the trust is a
resident only with respect to that part.
For the purposes of division (I)(3) of this section:
(a) A trust resides in this state for the trust's current
taxable year to the extent, as described in division (I)(3)(d)
of this section, that the trust consists directly or indirectly,
in whole or in part, of assets, net of any related liabilities,
that were transferred, or caused to be transferred, directly or
indirectly, to the trust by any of the following:
(i) A person, a court, or a governmental entity or
instrumentality on account of the death of a decedent, but only
if the trust is described in division (I)(3)(e)(i) or (ii) of
this section;
(ii) A person who was domiciled in this state for the
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1509 H. B. No. 87 Page 53
As Introduced
purposes of this chapter when the person directly or indirectly
transferred assets to an irrevocable trust, but only if at least
one of the trust's qualifying beneficiaries is domiciled in this
state for the purposes of this chapter during all or some
portion of the trust's current taxable year;
(iii) A person who was domiciled in this state for the
purposes of this chapter when the trust document or instrument
or part of the trust document or instrument became irrevocable,
but only if at least one of the trust's qualifying beneficiaries
is a resident domiciled in this state for the purposes of this
chapter during all or some portion of the trust's current
taxable year. If a trust document or instrument became
irrevocable upon the death of a person who at the time of death
was domiciled in this state for purposes of this chapter, that
person is a person described in division (I)(3)(a)(iii) of this
section.
(b) A trust is irrevocable to the extent that the
transferor is not considered to be the owner of the net assets
of the trust under sections 671 to 678 of the Internal Revenue
Code.
(c) With respect to a trust other than a charitable lead
trust, "qualifying beneficiary" has the same meaning as
"potential current beneficiary" as defined in section 1361(e)(2)
of the Internal Revenue Code, and with respect to a charitable
lead trust "qualifying beneficiary" is any current, future, or
contingent beneficiary, but with respect to any trust
"qualifying beneficiary" excludes a person or a governmental
entity or instrumentality to any of which a contribution would
qualify for the charitable deduction under section 170 of the
Internal Revenue Code.
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1539 H. B. No. 87 Page 54
As Introduced
(d) For the purposes of division (I)(3)(a) of this
section, the extent to which a trust consists directly or
indirectly, in whole or in part, of assets, net of any related
liabilities, that were transferred directly or indirectly, in
whole or part, to the trust by any of the sources enumerated in
that division shall be ascertained by multiplying the fair
market value of the trust's assets, net of related liabilities,
by the qualifying ratio, which shall be computed as follows:
(i) The first time the trust receives assets, the
numerator of the qualifying ratio is the fair market value of
those assets at that time, net of any related liabilities, from
sources enumerated in division (I)(3)(a) of this section. The
denominator of the qualifying ratio is the fair market value of
all the trust's assets at that time, net of any related
liabilities.
(ii) Each subsequent time the trust receives assets, a
revised qualifying ratio shall be computed. The numerator of the
revised qualifying ratio is the sum of (1) the fair market value
of the trust's assets immediately prior to the subsequent
transfer, net of any related liabilities, multiplied by the
qualifying ratio last computed without regard to the subsequent
transfer, and (2) the fair market value of the subsequently
transferred assets at the time transferred, net of any related
liabilities, from sources enumerated in division (I)(3)(a) of
this section. The denominator of the revised qualifying ratio is
the fair market value of all the trust's assets immediately
after the subsequent transfer, net of any related liabilities.
(iii) Whether a transfer to the trust is by or from any of
the sources enumerated in division (I)(3)(a) of this section
shall be ascertained without regard to the domicile of the
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1569 H. B. No. 87 Page 55
As Introduced
trust's beneficiaries.
(e) For the purposes of division (I)(3)(a)(i) of this
section:
(i) A trust is described in division (I)(3)(e)(i) of this
section if the trust is a testamentary trust and the testator of
that testamentary trust was domiciled in this state at the time
of the testator's death for purposes of the taxes levied under
Chapter 5731. of the Revised Code.
(ii) A trust is described in division (I)(3)(e)(ii) of
this section if the transfer is a qualifying transfer described
in any of divisions (I)(3)(f)(i) to (vi) of this section, the
trust is an irrevocable inter vivos trust, and at least one of
the trust's qualifying beneficiaries is domiciled in this state
for purposes of this chapter during all or some portion of the
trust's current taxable year.
(f) For the purposes of division (I)(3)(e)(ii) of this
section, a "qualifying transfer" is a transfer of assets, net of
any related liabilities, directly or indirectly to a trust, if
the transfer is described in any of the following:
(i) The transfer is made to a trust, created by the
decedent before the decedent's death and while the decedent was
domiciled in this state for the purposes of this chapter, and,
prior to the death of the decedent, the trust became irrevocable
while the decedent was domiciled in this state for the purposes
of this chapter.
(ii) The transfer is made to a trust to which the
decedent, prior to the decedent's death, had directly or
indirectly transferred assets, net of any related liabilities,
while the decedent was domiciled in this state for the purposes
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1598 H. B. No. 87 Page 56
As Introduced
of this chapter, and prior to the death of the decedent the
trust became irrevocable while the decedent was domiciled in
this state for the purposes of this chapter.
(iii) The transfer is made on account of a contractual
relationship existing directly or indirectly between the
transferor and either the decedent or the estate of the decedent
at any time prior to the date of the decedent's death, and the
decedent was domiciled in this state at the time of death for
purposes of the taxes levied under Chapter 5731. of the Revised
Code.
(iv) The transfer is made to a trust on account of a
contractual relationship existing directly or indirectly between
the transferor and another person who at the time of the
decedent's death was domiciled in this state for purposes of
this chapter.
(v) The transfer is made to a trust on account of the will
of a testator who was domiciled in this state at the time of the
testator's death for purposes of the taxes levied under Chapter
5731. of the Revised Code.
(vi) The transfer is made to a trust created by or caused
to be created by a court, and the trust was directly or
indirectly created in connection with or as a result of the
death of an individual who, for purposes of the taxes levied
under Chapter 5731. of the Revised Code, was domiciled in this
state at the time of the individual's death.
(g) The tax commissioner may adopt rules to ascertain the
part of a trust residing in this state.
(J) "Nonresident" means an individual or estate that is
not a resident. An individual who is a resident for only part of
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1627 H. B. No. 87 Page 57
As Introduced
a taxable year is a nonresident for the remainder of that
taxable year.
(K) "Pass-through entity" has the same meaning as in
section 5733.04 of the Revised Code.
(L) "Return" means the notifications and reports required
to be filed pursuant to this chapter for the purpose of
reporting the tax due and includes declarations of estimated tax
when so required.
(M) "Taxable year" means the calendar year or the
taxpayer's fiscal year ending during the calendar year, or
fractional part thereof, upon which the adjusted gross income is
calculated pursuant to this chapter.
(N) "Taxpayer" means any person subject to the tax imposed
by section 5747.02 of the Revised Code or any pass-through
entity that makes the election under division (D) of section
5747.08 of the Revised Code.
(O) "Dependents" means one of the following:
(1) For taxable years beginning on or after January 1,
2018, and before January 1, 2026, dependents as defined in the
Internal Revenue Code;
(2) For all other taxable years, dependents as defined in
the Internal Revenue Code and as claimed in the taxpayer's
federal income tax return for the taxable year or which the
taxpayer would have been permitted to claim had the taxpayer
filed a federal income tax return.
"Dependents" shall include each child conceived, including
each child conceived by assisted reproduction that has been
placed inside the taxpayer or taxpayer's spouse's uterus or lost
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1655 H. B. No. 87 Page 58
As Introduced
to spontaneous miscarriage, by the taxpayer or the taxpayer's
spouse during the taxable year, so long as:
(a) The child is not also a qualifying child, as that term
is defined in section 152 of the Internal Revenue Code, for the
same taxable year.
(b) The child's life was not terminated in an abortion,
including by selective reduction.
As used in division (O) of this section, "assisted
reproduction" has the same meaning as in section 2907.13 of the
Revised Code and "spontaneous miscarriage" has the same meaning
as in section 2919.19 of the Revised Code.
(P) "Principal county of employment" means, in the case of
a nonresident, the county within the state in which a taxpayer
performs services for an employer or, if those services are
performed in more than one county, the county in which the major
portion of the services are performed.
(Q) As used in sections 5747.50 to 5747.55 of the Revised
Code:
(1) "Subdivision" means any county, municipal corporation,
park district, or township.
(2) "Essential local government purposes" includes all
functions that any subdivision is required by general law to
exercise, including like functions that are exercised under a
charter adopted pursuant to the Ohio Constitution.
(R) "Overpayment" means any amount already paid that
exceeds the figure determined to be the correct amount of the
tax.
(S) "Taxable income" or "Ohio taxable income" applies only
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1683 H. B. No. 87 Page 59
As Introduced
to estates and trusts, and means federal taxable income, as
defined and used in the Internal Revenue Code, adjusted as
follows:
(1) Add interest or dividends, net of ordinary, necessary,
and reasonable expenses not deducted in computing federal
taxable income, on obligations or securities of any state or of
any political subdivision or authority of any state, other than
this state and its subdivisions and authorities, but only to the
extent that such net amount is not otherwise includible in Ohio
taxable income and is described in either division (S)(1)(a) or
(b) of this section:
(a) The net amount is not attributable to the S portion of
an electing small business trust and has not been distributed to
beneficiaries for the taxable year;
(b) The net amount is attributable to the S portion of an
electing small business trust for the taxable year.
(2) Add interest or dividends, net of ordinary, necessary,
and reasonable expenses not deducted in computing federal
taxable income, on obligations of any authority, commission,
instrumentality, territory, or possession of the United States
to the extent that the interest or dividends are exempt from
federal income taxes but not from state income taxes, but only
to the extent that such net amount is not otherwise includible
in Ohio taxable income and is described in either division (S)
(1)(a) or (b) of this section;
(3) Add the amount of personal exemption allowed to the
estate pursuant to section 642(b) of the Internal Revenue Code;
(4) Deduct interest or dividends, net of related expenses
deducted in computing federal taxable income, on obligations of
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1712 H. B. No. 87 Page 60
As Introduced
the United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States
to the extent that the interest or dividends are exempt from
state taxes under the laws of the United States, but only to the
extent that such amount is included in federal taxable income
and is described in either division (S)(1)(a) or (b) of this
section;
(5) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal taxable income for
the taxable year, had the work opportunity tax credit allowed
under sections 38, 51, and 52 of the Internal Revenue Code not
been in effect, but only to the extent such amount relates
either to income included in federal taxable income for the
taxable year or to income of the S portion of an electing small
business trust for the taxable year;
(6) Deduct any interest or interest equivalent, net of
related expenses deducted in computing federal taxable income,
on public obligations and purchase obligations, but only to the
extent that such net amount relates either to income included in
federal taxable income for the taxable year or to income of the
S portion of an electing small business trust for the taxable
year;
(7) Add any loss or deduct any gain resulting from sale,
exchange, or other disposition of public obligations to the
extent that such loss has been deducted or such gain has been
included in computing either federal taxable income or income of
the S portion of an electing small business trust for the
taxable year;
(8) Except in the case of the final return of an estate,
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As Introduced
add any amount deducted by the taxpayer on both its Ohio estate
tax return pursuant to section 5731.14 of the Revised Code, and
on its federal income tax return in determining federal taxable
income;
(9)(a) Deduct any amount included in federal taxable
income solely because the amount represents a reimbursement or
refund of expenses that in a previous year the decedent had
deducted as an itemized deduction pursuant to section 63 of the
Internal Revenue Code and applicable treasury regulations. The
deduction otherwise allowed under division (S)(9)(a) of this
section shall be reduced to the extent the reimbursement is
attributable to an amount the taxpayer or decedent deducted
under this section in any taxable year.
(b) Add any amount not otherwise included in Ohio taxable
income for any taxable year to the extent that the amount is
attributable to the recovery during the taxable year of any
amount deducted or excluded in computing federal or Ohio taxable
income in any taxable year, but only to the extent such amount
has not been distributed to beneficiaries for the taxable year.
(10) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's taxable income or the decedent's
adjusted gross income for a prior taxable year and did not
qualify for a credit under division (A) or (B) of section
5747.05 of the Revised Code for that year.
(b) It does not otherwise reduce the taxpayer's taxable
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1771 H. B. No. 87 Page 62
As Introduced
income or the decedent's adjusted gross income for the current
or any other taxable year.
(11) Add any amount claimed as a credit under section
5747.059 of the Revised Code to the extent that the amount
satisfies either of the following:
(a) The amount was deducted or excluded from the
computation of the taxpayer's federal taxable income as required
to be reported for the taxpayer's taxable year under the
Internal Revenue Code;
(b) The amount resulted in a reduction in the taxpayer's
federal taxable income as required to be reported for any of the
taxpayer's taxable years under the Internal Revenue Code.
(12) Deduct any amount, net of related expenses deducted
in computing federal taxable income, that a trust is required to
report as farm income on its federal income tax return, but only
if the assets of the trust include at least ten acres of land
satisfying the definition of "land devoted exclusively to
agricultural use" under section 5713.30 of the Revised Code,
regardless of whether the land is valued for tax purposes as
such land under sections 5713.30 to 5713.38 of the Revised Code.
If the trust is a pass-through entity investor, section 5747.231
of the Revised Code applies in ascertaining if the trust is
eligible to claim the deduction provided by division (S)(12) of
this section in connection with the pass-through entity's farm
income.
Except for farm income attributable to the S portion of an
electing small business trust, the deduction provided by
division (S)(12) of this section is allowed only to the extent
that the trust has not distributed such farm income.
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As Introduced
(13) Add the net amount of income described in section
641(c) of the Internal Revenue Code to the extent that amount is
not included in federal taxable income.
(14) Deduct the amount the taxpayer would be required to
deduct under division (A)(18) of this section if the taxpayer's
Ohio taxable income were was computed in the same manner as an
individual's Ohio adjusted gross income is computed under this
section.
(15) Add, to the extent not otherwise included in
computing taxable income or Ohio taxable income for any taxable
year, the taxpayer's proportionate share of the amount of the
tax levied under section 5747.38 of the Revised Code and paid by
an electing pass-through entity for the taxable year.
(16) Add any income taxes deducted in computing federal
taxable income or Ohio taxable income to the extent the income
taxes were derived from income subject to a tax levied in
another state or the District of Columbia when such tax was
enacted for purposes of complying with internal revenue service
notice 2020-75.
(T) "School district income" and "school district income
tax" have the same meanings as in section 5748.01 of the Revised
Code.
(U) As used in divisions (A)(7), (A)(8), (S)(6), and (S)
(7) of this section, "public obligations," "purchase
obligations," and "interest or interest equivalent" have the
same meanings as in section 5709.76 of the Revised Code.
(V) "Limited liability company" means any limited
liability company formed under former Chapter 1705. of the
Revised Code as that chapter existed prior to February 11, 2022,
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As Introduced
Chapter 1706. of the Revised Code, or the laws of any other
state.
(W) "Pass-through entity investor" means any person who,
during any portion of a taxable year of a pass-through entity,
is a partner, member, shareholder, or equity investor in that
pass-through entity.
(X) "Banking day" has the same meaning as in section
1304.01 of the Revised Code.
(Y) "Month" means a calendar month.
(Z) "Quarter" means the first three months, the second
three months, the third three months, or the last three months
of the taxpayer's taxable year.
(AA)(1) "Modified business income" means the business
income included in a trust's Ohio taxable income after such
taxable income is first reduced by the qualifying trust amount,
if any.
(2) "Qualifying trust amount" of a trust means capital
gains and losses from the sale, exchange, or other disposition
of equity or ownership interests in, or debt obligations of, a
qualifying investee to the extent included in the trust's Ohio
taxable income, but only if the following requirements are
satisfied:
(a) The book value of the qualifying investee's physical
assets in this state and everywhere, as of the last day of the
qualifying investee's fiscal or calendar year ending immediately
prior to the date on which the trust recognizes the gain or
loss, is available to the trust.
(b) The requirements of section 5747.011 of the Revised
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Code are satisfied for the trust's taxable year in which the
trust recognizes the gain or loss.
Any gain or loss that is not a qualifying trust amount is
modified business income, qualifying investment income, or
modified nonbusiness income, as the case may be.
(3) "Modified nonbusiness income" means a trust's Ohio
taxable income other than modified business income, other than
the qualifying trust amount, and other than qualifying
investment income, as defined in section 5747.012 of the Revised
Code, to the extent such qualifying investment income is not
otherwise part of modified business income.
(4) "Modified Ohio taxable income" applies only to trusts,
and means the sum of the amounts described in divisions (AA)(4)
(a) to (c) of this section:
(a) The fraction, calculated under section 5747.013, and
applying section 5747.231 of the Revised Code, multiplied by the
sum of the following amounts:
(i) The trust's modified business income;
(ii) The trust's qualifying investment income, as defined
in section 5747.012 of the Revised Code, but only to the extent
the qualifying investment income does not otherwise constitute
modified business income and does not otherwise constitute a
qualifying trust amount.
(b) The qualifying trust amount multiplied by a fraction,
the numerator of which is the sum of the book value of the
qualifying investee's physical assets in this state on the last
day of the qualifying investee's fiscal or calendar year ending
immediately prior to the day on which the trust recognizes the
qualifying trust amount, and the denominator of which is the sum
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of the book value of the qualifying investee's total physical
assets everywhere on the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the day on
which the trust recognizes the qualifying trust amount. If, for
a taxable year, the trust recognizes a qualifying trust amount
with respect to more than one qualifying investee, the amount
described in division (AA)(4)(b) of this section shall equal the
sum of the products so computed for each such qualifying
investee.
(c)(i) With respect to a trust or portion of a trust that
is a resident as ascertained in accordance with division (I)(3)
(d) of this section, its modified nonbusiness income.
(ii) With respect to a trust or portion of a trust that is
not a resident as ascertained in accordance with division (I)(3)
(d) of this section, the amount of its modified nonbusiness
income satisfying the descriptions in divisions (B)(2) to (5) of
section 5747.20 of the Revised Code, except as otherwise
provided in division (AA)(4)(c)(ii) of this section. With
respect to a trust or portion of a trust that is not a resident
as ascertained in accordance with division (I)(3)(d) of this
section, the trust's portion of modified nonbusiness income
recognized from the sale, exchange, or other disposition of a
debt interest in or equity interest in a section 5747.212
entity, as defined in section 5747.212 of the Revised Code,
without regard to division (A) of that section, shall not be
allocated to this state in accordance with section 5747.20 of
the Revised Code but shall be apportioned to this state in
accordance with division (B) of section 5747.212 of the Revised
Code without regard to division (A) of that section.
If the allocation and apportionment of a trust's income
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under divisions (AA)(4)(a) and (c) of this section do not fairly
represent the modified Ohio taxable income of the trust in this
state, the alternative methods described in division (C) of
section 5747.21 of the Revised Code may be applied in the manner
and to the same extent provided in that section.
(5)(a) Except as set forth in division (AA)(5)(b) of this
section, "qualifying investee" means a person in which a trust
has an equity or ownership interest, or a person or unit of
government the debt obligations of either of which are owned by
a trust. For the purposes of division (AA)(2)(a) of this section
and for the purpose of computing the fraction described in
division (AA)(4)(b) of this section, all of the following apply:
(i) If the qualifying investee is a member of a qualifying
controlled group on the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the date on
which the trust recognizes the gain or loss, then "qualifying
investee" includes all persons in the qualifying controlled
group on such last day.
(ii) If the qualifying investee, or if the qualifying
investee and any members of the qualifying controlled group of
which the qualifying investee is a member on the last day of the
qualifying investee's fiscal or calendar year ending immediately
prior to the date on which the trust recognizes the gain or
loss, separately or cumulatively own, directly or indirectly, on
the last day of the qualifying investee's fiscal or calendar
year ending immediately prior to the date on which the trust
recognizes the qualifying trust amount, more than fifty per cent
of the equity of a pass-through entity, then the qualifying
investee and the other members are deemed to own the
proportionate share of the pass-through entity's physical assets
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which the pass-through entity directly or indirectly owns on the
last day of the pass-through entity's calendar or fiscal year
ending within or with the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the date on
which the trust recognizes the qualifying trust amount.
(iii) For the purposes of division (AA)(5)(a)(iii) of this
section, "upper level pass-through entity" means a pass-through
entity directly or indirectly owning any equity of another pass-
through entity, and "lower level pass-through entity" means that
other pass-through entity.
An upper level pass-through entity, whether or not it is
also a qualifying investee, is deemed to own, on the last day of
the upper level pass-through entity's calendar or fiscal year,
the proportionate share of the lower level pass-through entity's
physical assets that the lower level pass-through entity
directly or indirectly owns on the last day of the lower level
pass-through entity's calendar or fiscal year ending within or
with the last day of the upper level pass-through entity's
fiscal or calendar year. If the upper level pass-through entity
directly and indirectly owns less than fifty per cent of the
equity of the lower level pass-through entity on each day of the
upper level pass-through entity's calendar or fiscal year in
which or with which ends the calendar or fiscal year of the
lower level pass-through entity and if, based upon clear and
convincing evidence, complete information about the location and
cost of the physical assets of the lower pass-through entity is
not available to the upper level pass-through entity, then
solely for purposes of ascertaining if a gain or loss
constitutes a qualifying trust amount, the upper level pass-
through entity shall be deemed as owning no equity of the lower
level pass-through entity for each day during the upper level
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pass-through entity's calendar or fiscal year in which or with
which ends the lower level pass-through entity's calendar or
fiscal year. Nothing in division (AA)(5)(a)(iii) of this section
shall be construed to provide for any deduction or exclusion in
computing any trust's Ohio taxable income.
(b) With respect to a trust that is not a resident for the
taxable year and with respect to a part of a trust that is not a
resident for the taxable year, "qualifying investee" for that
taxable year does not include a C corporation if both of the
following apply:
(i) During the taxable year the trust or part of the trust
recognizes a gain or loss from the sale, exchange, or other
disposition of equity or ownership interests in, or debt
obligations of, the C corporation.
(ii) Such gain or loss constitutes nonbusiness income.
(6) "Available" means information is such that a person is
able to learn of the information by the due date plus
extensions, if any, for filing the return for the taxable year
in which the trust recognizes the gain or loss.
(BB) "Qualifying controlled group" has the same meaning as
in section 5733.04 of the Revised Code.
(CC) "Related member" has the same meaning as in section
5733.042 of the Revised Code.
(DD)(1) For the purposes of division (DD) of this section:
(a) "Qualifying person" means any person other than a
qualifying corporation.
(b) "Qualifying corporation" means any person classified
for federal income tax purposes as an association taxable as a
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2005 H. B. No. 87 Page 70
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corporation, except either of the following:
(i) A corporation that has made an election under
subchapter S, chapter one, subtitle A, of the Internal Revenue
Code for its taxable year ending within, or on the last day of,
the investor's taxable year;
(ii) A subsidiary that is wholly owned by any corporation
that has made an election under subchapter S, chapter one,
subtitle A of the Internal Revenue Code for its taxable year
ending within, or on the last day of, the investor's taxable
year.
(2) For the purposes of this chapter, unless expressly
stated otherwise, no qualifying person indirectly owns any asset
directly or indirectly owned by any qualifying corporation.
(EE) For purposes of this chapter and Chapter 5751. of the
Revised Code:
(1) "Trust" does not include a qualified pre-income tax
trust.
(2) A "qualified pre-income tax trust" is any pre-income
tax trust that makes a qualifying pre-income tax trust election
as described in division (EE)(3) of this section.
(3) A "qualifying pre-income tax trust election" is an
election by a pre-income tax trust to subject to the tax imposed
by section 5751.02 of the Revised Code the pre-income tax trust
and all pass-through entities of which the trust owns or
controls, directly, indirectly, or constructively through
related interests, five per cent or more of the ownership or
equity interests. The trustee shall notify the tax commissioner
in writing of the election on or before April 15, 2006. The
election, if timely made, shall be effective on and after
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January 1, 2006, and shall apply for all tax periods and tax
years until revoked by the trustee of the trust.
(4) A "pre-income tax trust" is a trust that satisfies all
of the following requirements:
(a) The document or instrument creating the trust was
executed by the grantor before January 1, 1972;
(b) The trust became irrevocable upon the creation of the
trust; and
(c) The grantor was domiciled in this state at the time
the trust was created.
(FF) "Uniformed services" means all of the following:
(1) "Armed forces of the United States" as defined in
section 5907.01 of the Revised Code;
(2) The commissioned corps of the national oceanic and
atmospheric administration;
(3) The commissioned corps of the public health service.
(GG) "Taxable business income" means the amount by which
an individual's business income that is included in federal
adjusted gross income exceeds the amount of business income the
individual is authorized to deduct under division (A)(28) of
this section for the taxable year.
(HH) "Employer" does not include a franchisor with respect
to the franchisor's relationship with a franchisee or an
employee of a franchisee, unless the franchisor agrees to assume
that role in writing or a court of competent jurisdiction
determines that the franchisor exercises a type or degree of
control over the franchisee or the franchisee's employees that
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2061 H. B. No. 87 Page 72
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is not customarily exercised by a franchisor for the purpose of
protecting the franchisor's trademark, brand, or both. For
purposes of this division, "franchisor" and "franchisee" have
the same meanings as in 16 C.F.R. 436.1.
(II) "Modified adjusted gross income" means Ohio adjusted
gross income plus any amount deducted under divisions (A)(28)
and (34) of this section for the taxable year.
(JJ) "Qualifying Ohio educator" means an individual who,
for a taxable year, qualifies as an eligible educator, as that
term is defined in section 62 of the Internal Revenue Code, and
who holds a certificate, license, or permit described in Chapter
3319. or section 3301.071 of the Revised Code.
Sec. 5747.025. (A) The personal exemption for the
taxpayer, the taxpayer's spouse, and each dependent shall be one
of the following amounts:
(1) Two thousand three hundred fifty dollars if the
taxpayer's modified adjusted gross income for the taxable year
as shown on an individual or joint annual return is less than or
equal to forty thousand dollars;
(2) Two thousand one hundred dollars if the taxpayer's
modified adjusted gross income for the taxable year as shown on
an individual or joint annual return is greater than forty
thousand dollars but less than or equal to eighty thousand
dollars;
(3) One thousand eight hundred fifty dollars if the
taxpayer's modified adjusted gross income for the taxable year
as shown on an individual or joint annual return is greater than
eighty thousand dollars.
(B) For taxable years beginning in 2020 and thereafter,
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the personal exemption amounts prescribed in division (A) of
this section shall be adjusted each year in the manner
prescribed in division (C) of this section. In the case of an
individual with respect to whom an exemption under section
5747.02 of the Revised Code is allowable to another taxpayer for
a taxable year beginning in the calendar year in which the
individual's taxable year begins, the exemption amount
applicable to such individual for such individual's taxable year
shall be zero.
(C) Except as otherwise provided in this division, in
August of each year, the tax commissioner shall determine the
percentage increase in the gross domestic product deflator
determined by the bureau of economic analysis of the United
States department of commerce from the first day of January of
the preceding calendar year to the last day of December of the
preceding year, and make a new adjustment to the personal
exemption amount for taxable years beginning in the current
calendar year by multiplying that amount by the percentage
increase in the gross domestic product deflator for that period;
adding the resulting product to the personal exemption amount
for taxable years beginning in the preceding calendar year; and
rounding the resulting sum upward to the nearest multiple of
fifty dollars. The adjusted amount applies to taxable years
beginning in the calendar year in which the adjustment is made
and to taxable years beginning in each ensuing calendar year
until a calendar year in which a new adjustment is made pursuant
to this division. The commissioner shall not make a new
adjustment in any calendar year in which the amount resulting
from the adjustment would be less than the amount resulting from
the adjustment in the preceding calendar year.
(D) If the taxpayer and the taxpayer's spouse file
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separate returns, the exemption authorized under division (A) of
this section for a conceived child may only be claimed by the
expecting mother.
Section 2. That existing sections 5739.02, 5747.01, and
5747.025 of the Revised Code are hereby repealed.
Section 3. (A) The amendment by this act of sections
5747.01 and 5747.025 of the Revised Code applies to taxable
years ending on or after January 1, 2026.
(B) The amendment by this act of section 5739.02 of the
Revised Code applies on and after January 1, 2026.
Section 4. This act shall be known as the Strategic Tax
Opportunities for Raising Kids (STORK) Act.
Section 5. Section 5747.01 of the Revised Code is
presented in this act as a composite of the section as amended
by both H.B. 101 and S.B. 154 of the 135th General Assembly. The
General Assembly, applying the principle stated in division (B)
of section 1.52 of the Revised Code that amendments are to be
harmonized if reasonably capable of simultaneous operation,
finds that the composite is the resulting version of the section
in effect prior to the effective date of the section as
presented in this act.
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