Ohio Municipal Income Tax Withholding Relief Provision Extended to December 31, 2021

In early 2020, Governor DeWine issued executive order EO 2020-01D, which declared a state of emergency due to the COVID-19 pandemic and required most employees to work from their homes.  Additionally, emergency relief was passed via HB 197, Section 29, that temporarily permitted employers to continue to withhold Ohio city income taxes based on an employee’s principal place of employment, not taking into consideration whether they were forced to work from their homes due to the pandemic.

Governor DeWine lifted executive order EO 2020-01D on June 18, 2021.  This triggered the expiration of the emergency withholding relief provision effective as of July 18, 2021.  However, on June 30th, 2021, Gov. DeWine signed Ohio HB 110 into law, which extended the temporary withholding relief under Section 29 of HB 197 through December 31, 2021.  The intent is that these provisions only apply to the employer’s municipal income tax withholding and to the apportionment of the employer’s net income.  The provisions were not intended to apply to any determination of where an employee worked for purposes of the employee’s individual municipal income tax liability.

Even with the additional withholding relief through the end of 2021, employers should consider how this will impact their business for 2022 and beyond, as well as prepare to account for the logistics of withholding Ohio city income taxes based on where their employees physically work.  Please reach out to your trusted Rehmann advisor for guidance and assistance with these matters.

Published in Tax

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