As Introduced

128th General Assembly
Regular Session
2009-2010
S. B. No. 258


Senator Grendell 

Cosponsors: Senators Hughes, Buehrer 

A BILL
To amend sections 5747.01, 5747.02, and 5747.055 of 1
the Revised Code to reduce the maximum effective 2
income tax rate applicable to unearned income of 3
persons age 70 1/2 years or older to 1%.4


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That sections 5747.01, 5747.02, and 5747.055 of 5
the Revised Code be amended to read as follows:6

       Sec. 5747.01.  Except as otherwise expressly provided or 7
clearly appearing from the context, any term used in this chapter 8
that is not otherwise defined in this section has the same meaning 9
as when used in a comparable context in the laws of the United 10
States relating to federal income taxes or if not used in a 11
comparable context in those laws, has the same meaning as in 12
section 5733.40 of the Revised Code. Any reference in this chapter 13
to the Internal Revenue Code includes other laws of the United 14
States relating to federal income taxes.15

       As used in this chapter:16

       (A) "Adjusted gross income" or "Ohio adjusted gross income" 17
means federal adjusted gross income, as defined and used in the 18
Internal Revenue Code, adjusted as provided in this section:19

       (1) Add interest or dividends on obligations or securities of 20
any state or of any political subdivision or authority of any 21
state, other than this state and its subdivisions and authorities.22

       (2) Add interest or dividends on obligations of any 23
authority, commission, instrumentality, territory, or possession 24
of the United States to the extent that the interest or dividends 25
are exempt from federal income taxes but not from state income 26
taxes.27

       (3) Deduct interest or dividends on obligations of the United 28
States and its territories and possessions or of any authority, 29
commission, or instrumentality of the United States to the extent 30
that the interest or dividends are included in federal adjusted 31
gross income but exempt from state income taxes under the laws of 32
the United States.33

       (4) Deduct disability and survivor's benefits to the extent 34
included in federal adjusted gross income.35

       (5) Deduct benefits under Title II of the Social Security Act 36
and tier 1 railroad retirement benefits to the extent included in 37
federal adjusted gross income under section 86 of the Internal 38
Revenue Code.39

       (6) In the case of a taxpayer who is a beneficiary of a trust 40
that makes an accumulation distribution as defined in section 665 41
of the Internal Revenue Code, add, for the beneficiary's taxable 42
years beginning before 2002, the portion, if any, of such 43
distribution that does not exceed the undistributed net income of 44
the trust for the three taxable years preceding the taxable year 45
in which the distribution is made to the extent that the portion 46
was not included in the trust's taxable income for any of the 47
trust's taxable years beginning in 2002 or thereafter. 48
"Undistributed net income of a trust" means the taxable income of 49
the trust increased by (a)(i) the additions to adjusted gross 50
income required under division (A) of this section and (ii) the 51
personal exemptions allowed to the trust pursuant to section 52
642(b) of the Internal Revenue Code, and decreased by (b)(i) the 53
deductions to adjusted gross income required under division (A) of 54
this section, (ii) the amount of federal income taxes attributable 55
to such income, and (iii) the amount of taxable income that has 56
been included in the adjusted gross income of a beneficiary by 57
reason of a prior accumulation distribution. Any undistributed net 58
income included in the adjusted gross income of a beneficiary 59
shall reduce the undistributed net income of the trust commencing 60
with the earliest years of the accumulation period.61

       (7) Deduct the amount of wages and salaries, if any, not 62
otherwise allowable as a deduction but that would have been 63
allowable as a deduction in computing federal adjusted gross 64
income for the taxable year, had the targeted jobs credit allowed 65
and determined under sections 38, 51, and 52 of the Internal 66
Revenue Code not been in effect.67

       (8) Deduct any interest or interest equivalent on public 68
obligations and purchase obligations to the extent that the 69
interest or interest equivalent is included in federal adjusted 70
gross income.71

       (9) Add any loss or deduct any gain resulting from the sale, 72
exchange, or other disposition of public obligations to the extent 73
that the loss has been deducted or the gain has been included in 74
computing federal adjusted gross income.75

       (10) Deduct or add amounts, as provided under section 5747.70 76
of the Revised Code, related to contributions to variable college 77
savings program accounts made or tuition units purchased pursuant 78
to Chapter 3334. of the Revised Code.79

       (11)(a) Deduct, to the extent not otherwise allowable as a 80
deduction or exclusion in computing federal or Ohio adjusted gross 81
income for the taxable year, the amount the taxpayer paid during 82
the taxable year for medical care insurance and qualified 83
long-term care insurance for the taxpayer, the taxpayer's spouse, 84
and dependents. No deduction for medical care insurance under 85
division (A)(11) of this section shall be allowed either to any 86
taxpayer who is eligible to participate in any subsidized health 87
plan maintained by any employer of the taxpayer or of the 88
taxpayer's spouse, or to any taxpayer who is entitled to, or on 89
application would be entitled to, benefits under part A of Title 90
XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 91
301, as amended. For the purposes of division (A)(11)(a) of this 92
section, "subsidized health plan" means a health plan for which 93
the employer pays any portion of the plan's cost. The deduction 94
allowed under division (A)(11)(a) of this section shall be the net 95
of any related premium refunds, related premium reimbursements, or 96
related insurance premium dividends received during the taxable 97
year.98

       (b) Deduct, to the extent not otherwise deducted or excluded 99
in computing federal or Ohio adjusted gross income during the 100
taxable year, the amount the taxpayer paid during the taxable 101
year, not compensated for by any insurance or otherwise, for 102
medical care of the taxpayer, the taxpayer's spouse, and 103
dependents, to the extent the expenses exceed seven and one-half 104
per cent of the taxpayer's federal adjusted gross income.105

       (c) Deduct, to the extent not otherwise deducted or excluded 106
in computing federal or Ohio adjusted gross income, any amount 107
included in federal adjusted gross income under section 105 or not 108
excluded under section 106 of the Internal Revenue Code solely 109
because it relates to an accident and health plan for a person who 110
otherwise would be a "qualifying relative" and thus a "dependent" 111
under section 152 of the Internal Revenue Code but for the fact 112
that the person fails to meet the income and support limitations 113
under section 152(d)(1)(B) and (C) of the Internal Revenue Code. 114

       (d) For purposes of division (A)(11) of this section, 115
"medical care" has the meaning given in section 213 of the 116
Internal Revenue Code, subject to the special rules, limitations, 117
and exclusions set forth therein, and "qualified long-term care" 118
has the same meaning given in section 7702B(c) of the Internal 119
Revenue Code. Solely for purposes of divisions (A)(11)(a) and (c) 120
of this section, "dependent" includes a person who otherwise would 121
be a "qualifying relative" and thus a "dependent" under section 122
152 of the Internal Revenue Code but for the fact that the person 123
fails to meet the income and support limitations under section 124
152(d)(1)(B) and (C) of the Internal Revenue Code.125

       (12)(a) Deduct any amount included in federal adjusted gross 126
income solely because the amount represents a reimbursement or 127
refund of expenses that in any year the taxpayer had deducted as 128
an itemized deduction pursuant to section 63 of the Internal 129
Revenue Code and applicable United States department of the 130
treasury regulations. The deduction otherwise allowed under 131
division (A)(12)(a) of this section shall be reduced to the extent 132
the reimbursement is attributable to an amount the taxpayer 133
deducted under this section in any taxable year.134

       (b) Add any amount not otherwise included in Ohio adjusted 135
gross income for any taxable year to the extent that the amount is 136
attributable to the recovery during the taxable year of any amount 137
deducted or excluded in computing federal or Ohio adjusted gross 138
income in any taxable year.139

       (13) Deduct any portion of the deduction described in section 140
1341(a)(2) of the Internal Revenue Code, for repaying previously 141
reported income received under a claim of right, that meets both 142
of the following requirements:143

       (a) It is allowable for repayment of an item that was 144
included in the taxpayer's adjusted gross income for a prior 145
taxable year and did not qualify for a credit under division (A) 146
or (B) of section 5747.05 of the Revised Code for that year;147

       (b) It does not otherwise reduce the taxpayer's adjusted 148
gross income for the current or any other taxable year.149

       (14) Deduct an amount equal to the deposits made to, and net 150
investment earnings of, a medical savings account during the 151
taxable year, in accordance with section 3924.66 of the Revised 152
Code. The deduction allowed by division (A)(14) of this section 153
does not apply to medical savings account deposits and earnings 154
otherwise deducted or excluded for the current or any other 155
taxable year from the taxpayer's federal adjusted gross income.156

       (15)(a) Add an amount equal to the funds withdrawn from a 157
medical savings account during the taxable year, and the net 158
investment earnings on those funds, when the funds withdrawn were 159
used for any purpose other than to reimburse an account holder 160
for, or to pay, eligible medical expenses, in accordance with 161
section 3924.66 of the Revised Code;162

       (b) Add the amounts distributed from a medical savings 163
account under division (A)(2) of section 3924.68 of the Revised 164
Code during the taxable year.165

       (16) Add any amount claimed as a credit under section 166
5747.059 of the Revised Code to the extent that such amount 167
satisfies either of the following:168

       (a) The amount was deducted or excluded from the computation 169
of the taxpayer's federal adjusted gross income as required to be 170
reported for the taxpayer's taxable year under the Internal 171
Revenue Code;172

       (b) The amount resulted in a reduction of the taxpayer's 173
federal adjusted gross income as required to be reported for any 174
of the taxpayer's taxable years under the Internal Revenue Code.175

       (17) Deduct the amount contributed by the taxpayer to an 176
individual development account program established by a county 177
department of job and family services pursuant to sections 329.11 178
to 329.14 of the Revised Code for the purpose of matching funds 179
deposited by program participants. On request of the tax 180
commissioner, the taxpayer shall provide any information that, in 181
the tax commissioner's opinion, is necessary to establish the 182
amount deducted under division (A)(17) of this section.183

       (18) Beginning in taxable year 2001 but not for any taxable 184
year beginning after December 31, 2005, if the taxpayer is married 185
and files a joint return and the combined federal adjusted gross 186
income of the taxpayer and the taxpayer's spouse for the taxable 187
year does not exceed one hundred thousand dollars, or if the 188
taxpayer is single and has a federal adjusted gross income for the 189
taxable year not exceeding fifty thousand dollars, deduct amounts 190
paid during the taxable year for qualified tuition and fees paid 191
to an eligible institution for the taxpayer, the taxpayer's 192
spouse, or any dependent of the taxpayer, who is a resident of 193
this state and is enrolled in or attending a program that 194
culminates in a degree or diploma at an eligible institution. The 195
deduction may be claimed only to the extent that qualified tuition 196
and fees are not otherwise deducted or excluded for any taxable 197
year from federal or Ohio adjusted gross income. The deduction may 198
not be claimed for educational expenses for which the taxpayer 199
claims a credit under section 5747.27 of the Revised Code.200

       (19) Add any reimbursement received during the taxable year 201
of any amount the taxpayer deducted under division (A)(18) of this 202
section in any previous taxable year to the extent the amount is 203
not otherwise included in Ohio adjusted gross income.204

       (20)(a)(i) Add five-sixths of the amount of depreciation 205
expense allowed by subsection (k) of section 168 of the Internal 206
Revenue Code, including the taxpayer's proportionate or 207
distributive share of the amount of depreciation expense allowed 208
by that subsection to a pass-through entity in which the taxpayer 209
has a direct or indirect ownership interest.210

       (ii) Add five-sixths of the amount of qualifying section 179 211
depreciation expense, including a person's proportionate or 212
distributive share of the amount of qualifying section 179 213
depreciation expense allowed to any pass-through entity in which 214
the person has a direct or indirect ownership. For the purposes of 215
this division, "qualifying section 179 depreciation expense" means 216
the difference between (I) the amount of depreciation expense 217
directly or indirectly allowed to the taxpayer under section 179 218
of the Internal Revenue Code, and (II) the amount of depreciation 219
expense directly or indirectly allowed to the taxpayer under 220
section 179 of the Internal Revenue Code as that section existed 221
on December 31, 2002.222

       The tax commissioner, under procedures established by the 223
commissioner, may waive the add-backs related to a pass-through 224
entity if the taxpayer owns, directly or indirectly, less than 225
five per cent of the pass-through entity.226

       (b) Nothing in division (A)(20) of this section shall be 227
construed to adjust or modify the adjusted basis of any asset.228

       (c) To the extent the add-back required under division 229
(A)(20)(a) of this section is attributable to property generating 230
nonbusiness income or loss allocated under section 5747.20 of the 231
Revised Code, the add-back shall be sitused to the same location 232
as the nonbusiness income or loss generated by the property for 233
the purpose of determining the credit under division (A) of 234
section 5747.05 of the Revised Code. Otherwise, the add-back shall 235
be apportioned, subject to one or more of the four alternative 236
methods of apportionment enumerated in section 5747.21 of the 237
Revised Code.238

       (d) For the purposes of division (A) of this section, net 239
operating loss carryback and carryforward shall not include 240
five-sixths of the allowance of any net operating loss deduction 241
carryback or carryforward to the taxable year to the extent such 242
loss resulted from depreciation allowed by section 168(k) of the 243
Internal Revenue Code and by the qualifying section 179 244
depreciation expense amount.245

       (21)(a) If the taxpayer was required to add an amount under 246
division (A)(20)(a) of this section for a taxable year, deduct 247
one-fifth of the amount so added for each of the five succeeding 248
taxable years.249

       (b) If the amount deducted under division (A)(21)(a) of this 250
section is attributable to an add-back allocated under division 251
(A)(20)(c) of this section, the amount deducted shall be sitused 252
to the same location. Otherwise, the add-back shall be apportioned 253
using the apportionment factors for the taxable year in which the 254
deduction is taken, subject to one or more of the four alternative 255
methods of apportionment enumerated in section 5747.21 of the 256
Revised Code.257

       (c) No deduction is available under division (A)(21)(a) of 258
this section with regard to any depreciation allowed by section 259
168(k) of the Internal Revenue Code and by the qualifying section 260
179 depreciation expense amount to the extent that such 261
depreciation resulted in or increased a federal net operating loss 262
carryback or carryforward to a taxable year to which division 263
(A)(20)(d) of this section does not apply.264

       (22) Deduct, to the extent not otherwise deducted or excluded 265
in computing federal or Ohio adjusted gross income for the taxable 266
year, the amount the taxpayer received during the taxable year as 267
reimbursement for life insurance premiums under section 5919.31 of 268
the Revised Code.269

        (23) Deduct, to the extent not otherwise deducted or excluded 270
in computing federal or Ohio adjusted gross income for the taxable 271
year, the amount the taxpayer received during the taxable year as 272
a death benefit paid by the adjutant general under section 5919.33 273
of the Revised Code.274

       (24) Deduct, to the extent included in federal adjusted gross 275
income and not otherwise allowable as a deduction or exclusion in 276
computing federal or Ohio adjusted gross income for the taxable 277
year, military pay and allowances received by the taxpayer during 278
the taxable year for active duty service in the United States 279
army, air force, navy, marine corps, or coast guard or reserve 280
components thereof or the national guard. The deduction may not be 281
claimed for military pay and allowances received by the taxpayer 282
while the taxpayer is stationed in this state.283

       (25) Deduct, to the extent not otherwise allowable as a 284
deduction or exclusion in computing federal or Ohio adjusted gross 285
income for the taxable year and not otherwise compensated for by 286
any other source, the amount of qualified organ donation expenses 287
incurred by the taxpayer during the taxable year, not to exceed 288
ten thousand dollars. A taxpayer may deduct qualified organ 289
donation expenses only once for all taxable years beginning with 290
taxable years beginning in 2007.291

       For the purposes of division (A)(25) of this section:292

        (a) "Human organ" means all or any portion of a human liver, 293
pancreas, kidney, intestine, or lung, and any portion of human 294
bone marrow.295

        (b) "Qualified organ donation expenses" means travel 296
expenses, lodging expenses, and wages and salary forgone by a 297
taxpayer in connection with the taxpayer's donation, while living, 298
of one or more of the taxpayer's human organs to another human 299
being.300

       (26) Deduct, to the extent not otherwise deducted or excluded 301
in computing federal or Ohio adjusted gross income for the taxable 302
year, amounts received by the taxpayer as retired military 303
personnel pay for service in the United States army, navy, air 304
force, coast guard, or marine corps or reserve components thereof, 305
or the national guard, or received by the surviving spouse or 306
former spouse of such a taxpayer under the survivor benefit plan 307
on account of such a taxpayer's death. If the taxpayer receives 308
income on account of retirement paid under the federal civil 309
service retirement system or federal employees retirement system, 310
or under any successor retirement program enacted by the congress 311
of the United States that is established and maintained for 312
retired employees of the United States government, and such 313
retirement income is based, in whole or in part, on credit for the 314
taxpayer's military service, the deduction allowed under this 315
division shall include only that portion of such retirement income 316
that is attributable to the taxpayer's military service, to the 317
extent that portion of such retirement income is otherwise 318
included in federal adjusted gross income and is not otherwise 319
deducted under this section. Any amount deducted under division 320
(A)(26) of this section is not included in a taxpayer's adjusted 321
gross income for the purposes of section 5747.055 of the Revised 322
Code. No amount may be deducted under division (A)(26) of this 323
section on the basis of which a credit was claimed under section 324
5747.055 of the Revised Code.325

       (27) Deduct, to the extent not otherwise deducted or excluded 326
in computing federal or Ohio adjusted gross income for the taxable 327
year, the amount the taxpayer received during the taxable year 328
from the military injury relief fund created in section 5101.98 of 329
the Revised Code.330

       (28) Deduct, to the extent not otherwise deducted or excluded 331
in computing federal or Ohio adjusted gross income for the taxable 332
year, the amount the taxpayer received as a veterans bonus during 333
the taxable year from the Ohio department of veterans services as 334
authorized by Section 2r of Article VIII, Ohio Constitution.335

       (29) In the case of an individual taxpayer who has attained 336
seventy and one-half years of age on or before the last day of the 337
taxpayer's taxable year that begins in or after 2010, the taxpayer 338
may elect to deduct, to the extent not otherwise deducted or 339
excluded in computing federal or Ohio adjusted gross income, all 340
items of income included in federal adjusted gross income that are 341
not earned income. As used in division (A)(29) of this section, 342
"earned income" means wages, salaries, tips, deferred 343
compensation, and other employee compensation, and net earnings 344
from self-employment as defined in section 1402(a) of the Internal 345
Revenue Code.346

        For the purposes of any other section of the Revised Code 347
that refers to "adjusted gross income" as defined in division (A) 348
of this section, the reference shall be considered to include the 349
sum of adjusted gross income and any amount deducted under 350
division (A)(29) of this section, unless the reference expressly 351
provides otherwise or the context clearly indicates otherwise.352

       (B) "Business income" means income, including gain or loss, 353
arising from transactions, activities, and sources in the regular 354
course of a trade or business and includes income, gain, or loss 355
from real property, tangible property, and intangible property if 356
the acquisition, rental, management, and disposition of the 357
property constitute integral parts of the regular course of a 358
trade or business operation. "Business income" includes income, 359
including gain or loss, from a partial or complete liquidation of 360
a business, including, but not limited to, gain or loss from the 361
sale or other disposition of goodwill.362

       (C) "Nonbusiness income" means all income other than business 363
income and may include, but is not limited to, compensation, rents 364
and royalties from real or tangible personal property, capital 365
gains, interest, dividends and distributions, patent or copyright 366
royalties, or lottery winnings, prizes, and awards.367

       (D) "Compensation" means any form of remuneration paid to an 368
employee for personal services.369

       (E) "Fiduciary" means a guardian, trustee, executor, 370
administrator, receiver, conservator, or any other person acting 371
in any fiduciary capacity for any individual, trust, or estate.372

       (F) "Fiscal year" means an accounting period of twelve months 373
ending on the last day of any month other than December.374

       (G) "Individual" means any natural person.375

       (H) "Internal Revenue Code" means the "Internal Revenue Code 376
of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.377

       (I) "Resident" means any of the following, provided that 378
division (I)(3) of this section applies only to taxable years of a 379
trust beginning in 2002 or thereafter:380

       (1) An individual who is domiciled in this state, subject to 381
section 5747.24 of the Revised Code;382

       (2) The estate of a decedent who at the time of death was 383
domiciled in this state. The domicile tests of section 5747.24 of 384
the Revised Code are not controlling for purposes of division 385
(I)(2) of this section.386

       (3) A trust that, in whole or part, resides in this state. If 387
only part of a trust resides in this state, the trust is a 388
resident only with respect to that part.389

       For the purposes of division (I)(3) of this section:390

       (a) A trust resides in this state for the trust's current 391
taxable year to the extent, as described in division (I)(3)(d) of 392
this section, that the trust consists directly or indirectly, in 393
whole or in part, of assets, net of any related liabilities, that 394
were transferred, or caused to be transferred, directly or 395
indirectly, to the trust by any of the following:396

        (i) A person, a court, or a governmental entity or 397
instrumentality on account of the death of a decedent, but only if 398
the trust is described in division (I)(3)(e)(i) or (ii) of this 399
section;400

       (ii) A person who was domiciled in this state for the 401
purposes of this chapter when the person directly or indirectly 402
transferred assets to an irrevocable trust, but only if at least 403
one of the trust's qualifying beneficiaries is domiciled in this 404
state for the purposes of this chapter during all or some portion 405
of the trust's current taxable year;406

       (iii) A person who was domiciled in this state for the 407
purposes of this chapter when the trust document or instrument or 408
part of the trust document or instrument became irrevocable, but 409
only if at least one of the trust's qualifying beneficiaries is a 410
resident domiciled in this state for the purposes of this chapter 411
during all or some portion of the trust's current taxable year. If 412
a trust document or instrument became irrevocable upon the death 413
of a person who at the time of death was domiciled in this state 414
for purposes of this chapter, that person is a person described in 415
division (I)(3)(a)(iii) of this section.416

        (b) A trust is irrevocable to the extent that the transferor 417
is not considered to be the owner of the net assets of the trust 418
under sections 671 to 678 of the Internal Revenue Code.419

       (c) With respect to a trust other than a charitable lead 420
trust, "qualifying beneficiary" has the same meaning as "potential 421
current beneficiary" as defined in section 1361(e)(2) of the 422
Internal Revenue Code, and with respect to a charitable lead trust 423
"qualifying beneficiary" is any current, future, or contingent 424
beneficiary, but with respect to any trust "qualifying 425
beneficiary" excludes a person or a governmental entity or 426
instrumentality to any of which a contribution would qualify for 427
the charitable deduction under section 170 of the Internal Revenue 428
Code.429

        (d) For the purposes of division (I)(3)(a) of this section, 430
the extent to which a trust consists directly or indirectly, in 431
whole or in part, of assets, net of any related liabilities, that 432
were transferred directly or indirectly, in whole or part, to the 433
trust by any of the sources enumerated in that division shall be 434
ascertained by multiplying the fair market value of the trust's 435
assets, net of related liabilities, by the qualifying ratio, which 436
shall be computed as follows:437

        (i) The first time the trust receives assets, the numerator 438
of the qualifying ratio is the fair market value of those assets 439
at that time, net of any related liabilities, from sources 440
enumerated in division (I)(3)(a) of this section. The denominator 441
of the qualifying ratio is the fair market value of all the 442
trust's assets at that time, net of any related liabilities.443

        (ii) Each subsequent time the trust receives assets, a 444
revised qualifying ratio shall be computed. The numerator of the 445
revised qualifying ratio is the sum of (1) the fair market value 446
of the trust's assets immediately prior to the subsequent 447
transfer, net of any related liabilities, multiplied by the 448
qualifying ratio last computed without regard to the subsequent 449
transfer, and (2) the fair market value of the subsequently 450
transferred assets at the time transferred, net of any related 451
liabilities, from sources enumerated in division (I)(3)(a) of this 452
section. The denominator of the revised qualifying ratio is the 453
fair market value of all the trust's assets immediately after the 454
subsequent transfer, net of any related liabilities.455

       (iii) Whether a transfer to the trust is by or from any of 456
the sources enumerated in division (I)(3)(a) of this section shall 457
be ascertained without regard to the domicile of the trust's 458
beneficiaries.459

        (e) For the purposes of division (I)(3)(a)(i) of this 460
section:461

        (i) A trust is described in division (I)(3)(e)(i) of this 462
section if the trust is a testamentary trust and the testator of 463
that testamentary trust was domiciled in this state at the time of 464
the testator's death for purposes of the taxes levied under 465
Chapter 5731. of the Revised Code.466

        (ii) A trust is described in division (I)(3)(e)(ii) of this 467
section if the transfer is a qualifying transfer described in any 468
of divisions (I)(3)(f)(i) to (vi) of this section, the trust is an 469
irrevocable inter vivos trust, and at least one of the trust's 470
qualifying beneficiaries is domiciled in this state for purposes 471
of this chapter during all or some portion of the trust's current 472
taxable year.473

        (f) For the purposes of division (I)(3)(e)(ii) of this 474
section, a "qualifying transfer" is a transfer of assets, net of 475
any related liabilities, directly or indirectly to a trust, if the 476
transfer is described in any of the following:477

        (i) The transfer is made to a trust, created by the decedent 478
before the decedent's death and while the decedent was domiciled 479
in this state for the purposes of this chapter, and, prior to the 480
death of the decedent, the trust became irrevocable while the 481
decedent was domiciled in this state for the purposes of this 482
chapter.483

        (ii) The transfer is made to a trust to which the decedent, 484
prior to the decedent's death, had directly or indirectly 485
transferred assets, net of any related liabilities, while the 486
decedent was domiciled in this state for the purposes of this 487
chapter, and prior to the death of the decedent the trust became 488
irrevocable while the decedent was domiciled in this state for the 489
purposes of this chapter.490

        (iii) The transfer is made on account of a contractual 491
relationship existing directly or indirectly between the 492
transferor and either the decedent or the estate of the decedent 493
at any time prior to the date of the decedent's death, and the 494
decedent was domiciled in this state at the time of death for 495
purposes of the taxes levied under Chapter 5731. of the Revised 496
Code.497

        (iv) The transfer is made to a trust on account of a 498
contractual relationship existing directly or indirectly between 499
the transferor and another person who at the time of the 500
decedent's death was domiciled in this state for purposes of this 501
chapter.502

        (v) The transfer is made to a trust on account of the will of 503
a testator who was domiciled in this state at the time of the 504
testator's death for purposes of the taxes levied under Chapter 505
5731. of the Revised Code.506

        (vi) The transfer is made to a trust created by or caused to 507
be created by a court, and the trust was directly or indirectly 508
created in connection with or as a result of the death of an 509
individual who, for purposes of the taxes levied under Chapter 510
5731. of the Revised Code, was domiciled in this state at the time 511
of the individual's death.512

       (g) The tax commissioner may adopt rules to ascertain the 513
part of a trust residing in this state.514

       (J) "Nonresident" means an individual or estate that is not a 515
resident. An individual who is a resident for only part of a 516
taxable year is a nonresident for the remainder of that taxable 517
year.518

       (K) "Pass-through entity" has the same meaning as in section 519
5733.04 of the Revised Code.520

       (L) "Return" means the notifications and reports required to 521
be filed pursuant to this chapter for the purpose of reporting the 522
tax due and includes declarations of estimated tax when so 523
required.524

       (M) "Taxable year" means the calendar year or the taxpayer's 525
fiscal year ending during the calendar year, or fractional part 526
thereof, upon which the adjusted gross income is calculated 527
pursuant to this chapter.528

       (N) "Taxpayer" means any person subject to the tax imposed by 529
section 5747.02 of the Revised Code or any pass-through entity 530
that makes the election under division (D) of section 5747.08 of 531
the Revised Code.532

       (O) "Dependents" means dependents as defined in the Internal 533
Revenue Code and as claimed in the taxpayer's federal income tax 534
return for the taxable year or which the taxpayer would have been 535
permitted to claim had the taxpayer filed a federal income tax 536
return.537

       (P) "Principal county of employment" means, in the case of a 538
nonresident, the county within the state in which a taxpayer 539
performs services for an employer or, if those services are 540
performed in more than one county, the county in which the major 541
portion of the services are performed.542

       (Q) As used in sections 5747.50 to 5747.55 of the Revised 543
Code:544

       (1) "Subdivision" means any county, municipal corporation, 545
park district, or township.546

       (2) "Essential local government purposes" includes all 547
functions that any subdivision is required by general law to 548
exercise, including like functions that are exercised under a 549
charter adopted pursuant to the Ohio Constitution.550

       (R) "Overpayment" means any amount already paid that exceeds 551
the figure determined to be the correct amount of the tax.552

       (S) "Taxable income" or "Ohio taxable income" applies only to 553
estates and trusts, and means federal taxable income, as defined 554
and used in the Internal Revenue Code, adjusted as follows:555

       (1) Add interest or dividends, net of ordinary, necessary, 556
and reasonable expenses not deducted in computing federal taxable 557
income, on obligations or securities of any state or of any 558
political subdivision or authority of any state, other than this 559
state and its subdivisions and authorities, but only to the extent 560
that such net amount is not otherwise includible in Ohio taxable 561
income and is described in either division (S)(1)(a) or (b) of 562
this section:563

        (a) The net amount is not attributable to the S portion of an 564
electing small business trust and has not been distributed to 565
beneficiaries for the taxable year;566

        (b) The net amount is attributable to the S portion of an 567
electing small business trust for the taxable year.568

       (2) Add interest or dividends, net of ordinary, necessary, 569
and reasonable expenses not deducted in computing federal taxable 570
income, on obligations of any authority, commission, 571
instrumentality, territory, or possession of the United States to 572
the extent that the interest or dividends are exempt from federal 573
income taxes but not from state income taxes, but only to the 574
extent that such net amount is not otherwise includible in Ohio 575
taxable income and is described in either division (S)(1)(a) or 576
(b) of this section;577

       (3) Add the amount of personal exemption allowed to the 578
estate pursuant to section 642(b) of the Internal Revenue Code;579

       (4) Deduct interest or dividends, net of related expenses 580
deducted in computing federal taxable income, on obligations of 581
the United States and its territories and possessions or of any 582
authority, commission, or instrumentality of the United States to 583
the extent that the interest or dividends are exempt from state 584
taxes under the laws of the United States, but only to the extent 585
that such amount is included in federal taxable income and is 586
described in either division (S)(1)(a) or (b) of this section;587

       (5) Deduct the amount of wages and salaries, if any, not 588
otherwise allowable as a deduction but that would have been 589
allowable as a deduction in computing federal taxable income for 590
the taxable year, had the targeted jobs credit allowed under 591
sections 38, 51, and 52 of the Internal Revenue Code not been in 592
effect, but only to the extent such amount relates either to 593
income included in federal taxable income for the taxable year or 594
to income of the S portion of an electing small business trust for 595
the taxable year;596

       (6) Deduct any interest or interest equivalent, net of 597
related expenses deducted in computing federal taxable income, on 598
public obligations and purchase obligations, but only to the 599
extent that such net amount relates either to income included in 600
federal taxable income for the taxable year or to income of the S 601
portion of an electing small business trust for the taxable year;602

       (7) Add any loss or deduct any gain resulting from sale, 603
exchange, or other disposition of public obligations to the extent 604
that such loss has been deducted or such gain has been included in 605
computing either federal taxable income or income of the S portion 606
of an electing small business trust for the taxable year;607

       (8) Except in the case of the final return of an estate, add 608
any amount deducted by the taxpayer on both its Ohio estate tax 609
return pursuant to section 5731.14 of the Revised Code, and on its 610
federal income tax return in determining federal taxable income;611

       (9)(a) Deduct any amount included in federal taxable income 612
solely because the amount represents a reimbursement or refund of 613
expenses that in a previous year the decedent had deducted as an 614
itemized deduction pursuant to section 63 of the Internal Revenue 615
Code and applicable treasury regulations. The deduction otherwise 616
allowed under division (S)(9)(a) of this section shall be reduced 617
to the extent the reimbursement is attributable to an amount the 618
taxpayer or decedent deducted under this section in any taxable 619
year.620

       (b) Add any amount not otherwise included in Ohio taxable 621
income for any taxable year to the extent that the amount is 622
attributable to the recovery during the taxable year of any amount 623
deducted or excluded in computing federal or Ohio taxable income 624
in any taxable year, but only to the extent such amount has not 625
been distributed to beneficiaries for the taxable year.626

       (10) Deduct any portion of the deduction described in section 627
1341(a)(2) of the Internal Revenue Code, for repaying previously 628
reported income received under a claim of right, that meets both 629
of the following requirements:630

       (a) It is allowable for repayment of an item that was 631
included in the taxpayer's taxable income or the decedent's 632
adjusted gross income for a prior taxable year and did not qualify 633
for a credit under division (A) or (B) of section 5747.05 of the 634
Revised Code for that year.635

       (b) It does not otherwise reduce the taxpayer's taxable 636
income or the decedent's adjusted gross income for the current or 637
any other taxable year.638

       (11) Add any amount claimed as a credit under section 639
5747.059 of the Revised Code to the extent that the amount 640
satisfies either of the following:641

       (a) The amount was deducted or excluded from the computation 642
of the taxpayer's federal taxable income as required to be 643
reported for the taxpayer's taxable year under the Internal 644
Revenue Code;645

       (b) The amount resulted in a reduction in the taxpayer's 646
federal taxable income as required to be reported for any of the 647
taxpayer's taxable years under the Internal Revenue Code.648

       (12) Deduct any amount, net of related expenses deducted in 649
computing federal taxable income, that a trust is required to 650
report as farm income on its federal income tax return, but only 651
if the assets of the trust include at least ten acres of land 652
satisfying the definition of "land devoted exclusively to 653
agricultural use" under section 5713.30 of the Revised Code, 654
regardless of whether the land is valued for tax purposes as such 655
land under sections 5713.30 to 5713.38 of the Revised Code. If the 656
trust is a pass-through entity investor, section 5747.231 of the 657
Revised Code applies in ascertaining if the trust is eligible to 658
claim the deduction provided by division (S)(12) of this section 659
in connection with the pass-through entity's farm income.660

        Except for farm income attributable to the S portion of an 661
electing small business trust, the deduction provided by division 662
(S)(12) of this section is allowed only to the extent that the 663
trust has not distributed such farm income. Division (S)(12) of 664
this section applies only to taxable years of a trust beginning in 665
2002 or thereafter.666

       (13) Add the net amount of income described in section 641(c) 667
of the Internal Revenue Code to the extent that amount is not 668
included in federal taxable income.669

       (14) Add or deduct the amount the taxpayer would be required 670
to add or deduct under division (A)(20) or (21) of this section if 671
the taxpayer's Ohio taxable income were computed in the same 672
manner as an individual's Ohio adjusted gross income is computed 673
under this section. In the case of a trust, division (S)(14) of 674
this section applies only to any of the trust's taxable years 675
beginning in 2002 or thereafter.676

       (T) "School district income" and "school district income tax" 677
have the same meanings as in section 5748.01 of the Revised Code.678

       (U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)(7) 679
of this section, "public obligations," "purchase obligations," and 680
"interest or interest equivalent" have the same meanings as in 681
section 5709.76 of the Revised Code.682

       (V) "Limited liability company" means any limited liability 683
company formed under Chapter 1705. of the Revised Code or under 684
the laws of any other state.685

       (W) "Pass-through entity investor" means any person who, 686
during any portion of a taxable year of a pass-through entity, is 687
a partner, member, shareholder, or equity investor in that 688
pass-through entity.689

       (X) "Banking day" has the same meaning as in section 1304.01 690
of the Revised Code.691

       (Y) "Month" means a calendar month.692

       (Z) "Quarter" means the first three months, the second three 693
months, the third three months, or the last three months of the 694
taxpayer's taxable year.695

       (AA)(1) "Eligible institution" means a state university or 696
state institution of higher education as defined in section 697
3345.011 of the Revised Code, or a private, nonprofit college, 698
university, or other post-secondary institution located in this 699
state that possesses a certificate of authorization issued by the 700
Ohio board of regents pursuant to Chapter 1713. of the Revised 701
Code or a certificate of registration issued by the state board of 702
career colleges and schools under Chapter 3332. of the Revised 703
Code.704

       (2) "Qualified tuition and fees" means tuition and fees 705
imposed by an eligible institution as a condition of enrollment or 706
attendance, not exceeding two thousand five hundred dollars in 707
each of the individual's first two years of post-secondary 708
education. If the individual is a part-time student, "qualified 709
tuition and fees" includes tuition and fees paid for the academic 710
equivalent of the first two years of post-secondary education 711
during a maximum of five taxable years, not exceeding a total of 712
five thousand dollars. "Qualified tuition and fees" does not 713
include:714

       (a) Expenses for any course or activity involving sports, 715
games, or hobbies unless the course or activity is part of the 716
individual's degree or diploma program;717

       (b) The cost of books, room and board, student activity fees, 718
athletic fees, insurance expenses, or other expenses unrelated to 719
the individual's academic course of instruction;720

       (c) Tuition, fees, or other expenses paid or reimbursed 721
through an employer, scholarship, grant in aid, or other 722
educational benefit program.723

       (BB)(1) "Modified business income" means the business income 724
included in a trust's Ohio taxable income after such taxable 725
income is first reduced by the qualifying trust amount, if any.726

       (2) "Qualifying trust amount" of a trust means capital gains 727
and losses from the sale, exchange, or other disposition of equity 728
or ownership interests in, or debt obligations of, a qualifying 729
investee to the extent included in the trust's Ohio taxable 730
income, but only if the following requirements are satisfied:731

        (a) The book value of the qualifying investee's physical 732
assets in this state and everywhere, as of the last day of the 733
qualifying investee's fiscal or calendar year ending immediately 734
prior to the date on which the trust recognizes the gain or loss, 735
is available to the trust.736

       (b) The requirements of section 5747.011 of the Revised Code 737
are satisfied for the trust's taxable year in which the trust 738
recognizes the gain or loss.739

        Any gain or loss that is not a qualifying trust amount is 740
modified business income, qualifying investment income, or 741
modified nonbusiness income, as the case may be.742

       (3) "Modified nonbusiness income" means a trust's Ohio 743
taxable income other than modified business income, other than the 744
qualifying trust amount, and other than qualifying investment 745
income, as defined in section 5747.012 of the Revised Code, to the 746
extent such qualifying investment income is not otherwise part of 747
modified business income.748

       (4) "Modified Ohio taxable income" applies only to trusts, 749
and means the sum of the amounts described in divisions (BB)(4)(a) 750
to (c) of this section:751

       (a) The fraction, calculated under section 5747.013, and 752
applying section 5747.231 of the Revised Code, multiplied by the 753
sum of the following amounts:754

        (i) The trust's modified business income;755

        (ii) The trust's qualifying investment income, as defined in 756
section 5747.012 of the Revised Code, but only to the extent the 757
qualifying investment income does not otherwise constitute 758
modified business income and does not otherwise constitute a 759
qualifying trust amount.760

       (b) The qualifying trust amount multiplied by a fraction, the 761
numerator of which is the sum of the book value of the qualifying 762
investee's physical assets in this state on the last day of the 763
qualifying investee's fiscal or calendar year ending immediately 764
prior to the day on which the trust recognizes the qualifying 765
trust amount, and the denominator of which is the sum of the book 766
value of the qualifying investee's total physical assets 767
everywhere on the last day of the qualifying investee's fiscal or 768
calendar year ending immediately prior to the day on which the 769
trust recognizes the qualifying trust amount. If, for a taxable 770
year, the trust recognizes a qualifying trust amount with respect 771
to more than one qualifying investee, the amount described in 772
division (BB)(4)(b) of this section shall equal the sum of the 773
products so computed for each such qualifying investee.774

       (c)(i) With respect to a trust or portion of a trust that is 775
a resident as ascertained in accordance with division (I)(3)(d) of 776
this section, its modified nonbusiness income.777

        (ii) With respect to a trust or portion of a trust that is 778
not a resident as ascertained in accordance with division 779
(I)(3)(d) of this section, the amount of its modified nonbusiness 780
income satisfying the descriptions in divisions (B)(2) to (5) of 781
section 5747.20 of the Revised Code, except as otherwise provided 782
in division (BB)(4)(c)(ii) of this section. With respect to a 783
trust or portion of a trust that is not a resident as ascertained 784
in accordance with division (I)(3)(d) of this section, the trust's 785
portion of modified nonbusiness income recognized from the sale, 786
exchange, or other disposition of a debt interest in or equity 787
interest in a section 5747.212 entity, as defined in section 788
5747.212 of the Revised Code, without regard to division (A) of 789
that section, shall not be allocated to this state in accordance 790
with section 5747.20 of the Revised Code but shall be apportioned 791
to this state in accordance with division (B) of section 5747.212 792
of the Revised Code without regard to division (A) of that 793
section.794

       If the allocation and apportionment of a trust's income under 795
divisions (BB)(4)(a) and (c) of this section do not fairly 796
represent the modified Ohio taxable income of the trust in this 797
state, the alternative methods described in division (C) of 798
section 5747.21 of the Revised Code may be applied in the manner 799
and to the same extent provided in that section.800

       (5)(a) Except as set forth in division (BB)(5)(b) of this 801
section, "qualifying investee" means a person in which a trust has 802
an equity or ownership interest, or a person or unit of government 803
the debt obligations of either of which are owned by a trust. For 804
the purposes of division (BB)(2)(a) of this section and for the 805
purpose of computing the fraction described in division (BB)(4)(b) 806
of this section, all of the following apply:807

        (i) If the qualifying investee is a member of a qualifying 808
controlled group on the last day of the qualifying investee's 809
fiscal or calendar year ending immediately prior to the date on 810
which the trust recognizes the gain or loss, then "qualifying 811
investee" includes all persons in the qualifying controlled group 812
on such last day.813

        (ii) If the qualifying investee, or if the qualifying 814
investee and any members of the qualifying controlled group of 815
which the qualifying investee is a member on the last day of the 816
qualifying investee's fiscal or calendar year ending immediately 817
prior to the date on which the trust recognizes the gain or loss, 818
separately or cumulatively own, directly or indirectly, on the 819
last day of the qualifying investee's fiscal or calendar year 820
ending immediately prior to the date on which the trust recognizes 821
the qualifying trust amount, more than fifty per cent of the 822
equity of a pass-through entity, then the qualifying investee and 823
the other members are deemed to own the proportionate share of the 824
pass-through entity's physical assets which the pass-through 825
entity directly or indirectly owns on the last day of the 826
pass-through entity's calendar or fiscal year ending within or 827
with the last day of the qualifying investee's fiscal or calendar 828
year ending immediately prior to the date on which the trust 829
recognizes the qualifying trust amount.830

        (iii) For the purposes of division (BB)(5)(a)(iii) of this 831
section, "upper level pass-through entity" means a pass-through 832
entity directly or indirectly owning any equity of another 833
pass-through entity, and "lower level pass-through entity" means 834
that other pass-through entity.835

        An upper level pass-through entity, whether or not it is also 836
a qualifying investee, is deemed to own, on the last day of the 837
upper level pass-through entity's calendar or fiscal year, the 838
proportionate share of the lower level pass-through entity's 839
physical assets that the lower level pass-through entity directly 840
or indirectly owns on the last day of the lower level pass-through 841
entity's calendar or fiscal year ending within or with the last 842
day of the upper level pass-through entity's fiscal or calendar 843
year. If the upper level pass-through entity directly and 844
indirectly owns less than fifty per cent of the equity of the 845
lower level pass-through entity on each day of the upper level 846
pass-through entity's calendar or fiscal year in which or with 847
which ends the calendar or fiscal year of the lower level 848
pass-through entity and if, based upon clear and convincing 849
evidence, complete information about the location and cost of the 850
physical assets of the lower pass-through entity is not available 851
to the upper level pass-through entity, then solely for purposes 852
of ascertaining if a gain or loss constitutes a qualifying trust 853
amount, the upper level pass-through entity shall be deemed as 854
owning no equity of the lower level pass-through entity for each 855
day during the upper level pass-through entity's calendar or 856
fiscal year in which or with which ends the lower level 857
pass-through entity's calendar or fiscal year. Nothing in division 858
(BB)(5)(a)(iii) of this section shall be construed to provide for 859
any deduction or exclusion in computing any trust's Ohio taxable 860
income.861

       (b) With respect to a trust that is not a resident for the 862
taxable year and with respect to a part of a trust that is not a 863
resident for the taxable year, "qualifying investee" for that 864
taxable year does not include a C corporation if both of the 865
following apply:866

       (i) During the taxable year the trust or part of the trust 867
recognizes a gain or loss from the sale, exchange, or other 868
disposition of equity or ownership interests in, or debt 869
obligations of, the C corporation.870

       (ii) Such gain or loss constitutes nonbusiness income.871

        (6) "Available" means information is such that a person is 872
able to learn of the information by the due date plus extensions, 873
if any, for filing the return for the taxable year in which the 874
trust recognizes the gain or loss.875

        (CC) "Qualifying controlled group" has the same meaning as in 876
section 5733.04 of the Revised Code.877

        (DD) "Related member" has the same meaning as in section 878
5733.042 of the Revised Code.879

       (EE)(1) For the purposes of division (EE) of this section: 880

       (a) "Qualifying person" means any person other than a 881
qualifying corporation.882

       (b) "Qualifying corporation" means any person classified for 883
federal income tax purposes as an association taxable as a 884
corporation, except either of the following:885

       (i) A corporation that has made an election under subchapter 886
S, chapter one, subtitle A, of the Internal Revenue Code for its 887
taxable year ending within, or on the last day of, the investor's 888
taxable year;889

       (ii) A subsidiary that is wholly owned by any corporation 890
that has made an election under subchapter S, chapter one, 891
subtitle A of the Internal Revenue Code for its taxable year 892
ending within, or on the last day of, the investor's taxable year.893

       (2) For the purposes of this chapter, unless expressly stated 894
otherwise, no qualifying person indirectly owns any asset directly 895
or indirectly owned by any qualifying corporation.896

       (FF) For purposes of this chapter and Chapter 5751. of the 897
Revised Code:898

       (1) "Trust" does not include a qualified pre-income tax 899
trust.900

       (2) A "qualified pre-income tax trust" is any pre-income tax 901
trust that makes a qualifying pre-income tax trust election as 902
described in division (FF)(3) of this section.903

       (3) A "qualifying pre-income tax trust election" is an 904
election by a pre-income tax trust to subject to the tax imposed 905
by section 5751.02 of the Revised Code the pre-income tax trust 906
and all pass-through entities of which the trust owns or controls, 907
directly, indirectly, or constructively through related interests, 908
five per cent or more of the ownership or equity interests. The 909
trustee shall notify the tax commissioner in writing of the 910
election on or before April 15, 2006. The election, if timely 911
made, shall be effective on and after January 1, 2006, and shall 912
apply for all tax periods and tax years until revoked by the 913
trustee of the trust.914

       (4) A "pre-income tax trust" is a trust that satisfies all of 915
the following requirements:916

       (a) The document or instrument creating the trust was 917
executed by the grantor before January 1, 1972;918

       (b) The trust became irrevocable upon the creation of the 919
trust; and920

       (c) The grantor was domiciled in this state at the time the 921
trust was created.922

       Sec. 5747.02.  (A) For the purposes of this section, 923
"adjusted gross income" or "Ohio adjusted gross income" excludes 924
any amount deducted under division (A)(29) of section 5747.01 of 925
the Revised Code.926

       For the purpose of providing revenue for the support of 927
schools and local government functions, to provide relief to 928
property taxpayers, to provide revenue for the general revenue 929
fund, and to meet the expenses of administering the tax levied by 930
this chapter, there is hereby levied on every individual, trust, 931
and estate residing in or earning or receiving income in this 932
state, on every individual, trust, and estate earning or receiving 933
lottery winnings, prizes, or awards pursuant to Chapter 3770. of 934
the Revised Code, and on every individual, trust, and estate 935
otherwise having nexus with or in this state under the 936
Constitution of the United States, an annual tax measured in the 937
case of individuals by Ohio adjusted gross income and income 938
subject to the adjustment under division (A)(29) of section 939
5747.01 of the Revised Code less an exemption for the taxpayer, 940
the taxpayer's spouse, and each dependent as provided in section 941
5747.025 of the Revised Code; measured in the case of trusts by 942
modified Ohio taxable income under division (D) of this section; 943
and measured in the case of estates by Ohio taxable income. The944
For taxpayers electing the deduction allowed under division 945
(A)(29) of section 5747.01 of the Revised Code, the exemptions 946
provided in section 5747.025 of the Revised Code shall be applied 947
first against adjusted gross income taking account of that 948
deduction. If the sum of the applicable exemptions exceeds such 949
adjusted gross income, the excess shall be applied against the 950
amount deducted under that division.951

       The tax imposed by this section on the balance thus obtained 952
is hereby levied as follows: 953

       (1) For taxable years beginning in 2004:954

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 955
OR 956
MODIFIED OHIO 957
TAXABLE INCOME (TRUSTS) 958
OR 959
OHIO TAXABLE INCOME (ESTATES) TAX 960

$5,000 or less .743% 961
More than $5,000 but not more than $10,000 $37.15 plus 1.486% of the amount in excess of $5,000 962
More than $10,000 but not more than $15,000 $111.45 plus 2.972% of the amount in excess of $10,000 963
More than $15,000 but not more than $20,000 $260.05 plus 3.715% of the amount in excess of $15,000 964
More than $20,000 but not more than $40,000 $445.80 plus 4.457% of the amount in excess of $20,000 965
More than $40,000 but not more than $80,000 $1,337.20 plus 5.201% of the amount in excess of $40,000 966
More than $80,000 but not more than $100,000 $3,417.60 plus 5.943% of the amount in excess of $80,000 967
More than $100,000 but not more than $200,000 $4,606.20 plus 6.9% of the amount in excess of $100,000 968
More than $200,000 $11,506.20 plus 7.5% of the amount in excess of $200,000 969

       (2) For taxable years beginning in 2005:970

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 971
OR 972
MODIFIED OHIO 973
TAXABLE INCOME (TRUSTS) 974
OR 975
OHIO TAXABLE INCOME (ESTATES) TAX 976

$5,000 or less .712% 977
More than $5,000 but not more than $10,000 $35.60 plus 1.424% of the amount in excess of $5,000 978
More than $10,000 but not more than $15,000 $106.80 plus 2.847% of the amount in excess of $10,000 979
More than $15,000 but not more than $20,000 $249.15 plus 3.559% of the amount in excess of $15,000 980
More than $20,000 but not more than $40,000 $427.10 plus 4.27% of the amount in excess of $20,000 981
More than $40,000 but not more than $80,000 $1,281.10 plus 4.983% of the amount in excess of $40,000 982
More than $80,000 but not more than $100,000 $3,274.30 plus 5.693% of the amount in excess of $80,000 983
More than $100,000 but not more than $200,000 $4,412.90 plus 6.61% of the amount in excess of $100,000 984
More than $200,000 $11,022.90 plus 7.185% of the amount in excess of $200,000 985

       (3) For taxable years beginning in 2006:986

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 987
OR 988
MODIFIED OHIO 989
TAXABLE INCOME (TRUSTS) 990
OR 991
OHIO TAXABLE INCOME (ESTATES) TAX 992

$5,000 or less .681% 993
More than $5,000 but not more than $10,000 $34.05 plus 1.361% of the amount in excess of $5,000 994
More than $10,000 but not more than $15,000 $102.10 plus 2.722% of the amount in excess of $10,000 995
More than $15,000 but not more than $20,000 $238.20 plus 3.403% of the amount in excess of $15,000 996
More than $20,000 but not more than $40,000 $408.35 plus 4.083% of the amount in excess of $20,000 997
More than $40,000 but not more than $80,000 $1,224.95 plus 4.764% of the amount in excess of $40,000 998
More than $80,000 but not more than $100,000 $3,130.55 plus 5.444% of the amount in excess of $80,000 999
More than $100,000 but not more than $200,000 $4,219.35 plus 6.32% of the amount in excess of $100,000 1000
More than $200,000 $10,539.35 plus 6.87% of the amount in excess of $200,000 1001

       (4) For taxable years beginning in 2007:1002

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 1003
OR 1004
MODIFIED OHIO 1005
TAXABLE INCOME (TRUSTS) 1006
OR 1007
OHIO TAXABLE INCOME (ESTATES) TAX 1008

$5,000 or less .649% 1009
More than $5,000 but not more than $10,000 $32.45 plus 1.299% of the amount in excess of $5,000 1010
More than $10,000 but not more than $15,000 $97.40 plus 2.598% of the amount in excess of $10,000 1011
More than $15,000 but not more than $20,000 $227.30 plus 3.247% of the amount in excess of $15,000 1012
More than $20,000 but not more than $40,000 $389.65 plus 3.895% of the amount in excess of $20,000 1013
More than $40,000 but not more than $80,000 $1,168.65 plus 4.546% of the amount in excess of $40,000 1014
More than $80,000 but not more than $100,000 $2,987.05 plus 5.194% of the amount in excess of $80,000 1015
More than $100,000 but not more than $200,000 $4,025.85 plus 6.031% of the amount in excess of $100,000 1016
More than $200,000 $10,056.85 plus 6.555% of the amount in excess of $200,000 1017

       (5) For taxable years beginning in 2008,or 2009, or 2010: 1018

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 1019
OR 1020
MODIFIED OHIO 1021
TAXABLE INCOME (TRUSTS) 1022
OR 1023
OHIO TAXABLE INCOME (ESTATES) TAX 1024

$5,000 or less .618% 1025
More than $5,000 but not more than $10,000 $30.90 plus 1.236% of the amount in excess of $5,000 1026
More than $10,000 but not more than $15,000 $92.70 plus 2.473% of the amount in excess of $10,000 1027
More than $15,000 but not more than $20,000 $216.35 plus 3.091% of the amount in excess of $15,000 1028
More than $20,000 but not more than $40,000 $370.90 plus 3.708% of the amount in excess of $20,000 1029
More than $40,000 but not more than $80,000 $1,112.50 plus 4.327% of the amount in excess of $40,000 1030
More than $80,000 but not more than $100,000 $2,843.30 plus 4.945% of the amount in excess of $80,000 1031
More than $100,000 but not more than $200,000 $3,832.30 plus 5.741% of the amount in excess of $100,000 1032
More than $200,000 $9,573.30 plus 6.24% of the amount in excess of $200,000 1033

       (6)(2) For taxable years beginning in 2010, the sum of one 1034
one-hundredth of the difference between any amount deducted under 1035
division (A)(29) of section 5747.01 of the Revised Code and any 1036
excess personal exemption, plus the following:1037

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 1038
OR 1039
MODIFIED OHIO 1040
TAXABLE INCOME (TRUSTS) 1041
OR 1042
OHIO TAXABLE INCOME (ESTATES) TAX 1043

$5,000 or less .618% 1044
More than $5,000 but not more than $10,000 $30.90 plus 1.236% of the amount in excess of $5,000 1045
More than $10,000 but not more than $15,000 $92.70 plus 2.473% of the amount in excess of $10,000 1046
More than $15,000 but not more than $20,000 $216.35 plus 3.091% of the amount in excess of $15,000 1047
More than $20,000 but not more than $40,000 $370.90 plus 3.708% of the amount in excess of $20,000 1048
More than $40,000 but not more than $80,000 $1,112.50 plus 4.327% of the amount in excess of $40,000 1049
More than $80,000 but not more than $100,000 $2,843.30 plus 4.945% of the amount in excess of $80,000 1050
More than $100,000 but not more than $200,000 $3,832.30 plus 5.741% of the amount in excess of $100,000 1051
More than $200,000 $9,573.30 plus 6.24% of the amount in excess of $200,000 1052

       (3) For taxable years beginning in 2011 or thereafter the 1053
sum of one one-hundredth of the difference between any amount 1054
deducted under division (A)(29) of section 5747.01 of the Revised 1055
Code and any excess personal exemption, plus the following: 1056

OHIO ADJUSTED GROSS INCOME LESS EXEMPTIONS (INDIVIDUALS) 1057
OR 1058
MODIFIED OHIO 1059
TAXABLE INCOME (TRUSTS) 1060
OR 1061
OHIO TAXABLE INCOME (ESTATES) TAX 1062

$5,000 or less .587% 1063
More than $5,000 but not more than $10,000 $29.35 plus 1.174% of the amount in excess of $5,000 1064
More than $10,000 but not more than $15,000 $88.05 plus 2.348% of the amount in excess of $10,000 1065
More than $15,000 but not more than $20,000 $205.45 plus 2.935% of the amount in excess of $15,000 1066
More than $20,000 but not more than $40,000 $352.20 plus 3.521% of the amount in excess of $20,000 1067
More than $40,000 but not more than $80,000 $1,056.40 plus 4.109% of the amount in excess of $40,000 1068
More than $80,000 but not more than $100,000 $2,700.00 plus 4.695% of the amount in excess of $80,000 1069
More than $100,000 but not more than $200,000 $3,639.00 plus 5.451% of the amount in excess of $100,000 1070
More than $200,000 $9,090.00 plus 5.925% of the amount in excess of $200,000 1071

       In July of each year, beginning in 2010, the tax commissioner 1072
shall adjust the income amounts prescribed in this division by 1073
multiplying the percentage increase in the gross domestic product 1074
deflator computed that year under section 5747.025 of the Revised 1075
Code by each of the income amounts resulting from the adjustment 1076
under this division in the preceding year, adding the resulting 1077
product to the corresponding income amount resulting from the 1078
adjustment in the preceding year, and rounding the resulting sum 1079
to the nearest multiple of fifty dollars. The tax commissioner 1080
also shall recompute each of the tax dollar amounts to the extent 1081
necessary to reflect the adjustment of the income amounts. The 1082
rates of taxation shall not be adjusted. 1083

       The adjusted amounts apply to taxable years beginning in the 1084
calendar year in which the adjustments are made. The tax 1085
commissioner shall not make such adjustments in any year in which 1086
the amount resulting from the adjustment would be less than the 1087
amount resulting from the adjustment in the preceding year. 1088

       (B) If the director of budget and management makes a 1089
certification to the tax commissioner under division (B) of 1090
section 131.44 of the Revised Code, the amount of tax as 1091
determined under division (A) of this section shall be reduced by 1092
the percentage prescribed in that certification for taxable years 1093
beginning in the calendar year in which that certification is 1094
made. 1095

       (C) The levy of this tax on income does not prevent a 1096
municipal corporation, a joint economic development zone created 1097
under section 715.691, or a joint economic development district 1098
created under section 715.70 or 715.71 or sections 715.72 to 1099
715.81 of the Revised Code from levying a tax on income. 1100

       (D) This division applies only to taxable years of a trust 1101
beginning in 2002 or thereafter. 1102

       (1) The tax imposed by this section on a trust shall be 1103
computed by multiplying the Ohio modified taxable income of the 1104
trust by the rates prescribed by division (A) of this section. 1105

       (2) A nonresident trust may claim a credit against the tax 1106
computed under division (D) of this section equal to the lesser of 1107
(1) the tax paid to another state or the District of Columbia on 1108
the nonresident trust's modified nonbusiness income, other than 1109
the portion of the nonresident trust's nonbusiness income that is 1110
qualifying investment income as defined in section 5747.012 of the 1111
Revised Code, or (2) the effective tax rate, based on modified 1112
Ohio taxable income, multiplied by the nonresident trust's 1113
modified nonbusiness income other than the portion of the 1114
nonresident trust's nonbusiness income that is qualifying 1115
investment income. The credit applies before any other applicable 1116
credits. 1117

       (3) The credits enumerated in divisions (A)(1) to (13) of 1118
section 5747.98 of the Revised Code do not apply to a trust 1119
subject to division (D) of this section. Any credits enumerated in 1120
other divisions of section 5747.98 of the Revised Code apply to a 1121
trust subject to division (D) of this section. To the extent that 1122
the trust distributes income for the taxable year for which a 1123
credit is available to the trust, the credit shall be shared by 1124
the trust and its beneficiaries. The tax commissioner and the 1125
trust shall be guided by applicable regulations of the United 1126
States treasury regarding the sharing of credits. 1127

       (E) For the purposes of this section, "trust" means any trust 1128
described in Subchapter J of Chapter 1 of the Internal Revenue 1129
Code, excluding trusts that are not irrevocable as defined in 1130
division (I)(3)(b) of section 5747.01 of the Revised Code and that 1131
have no modified Ohio taxable income for the taxable year, 1132
charitable remainder trusts, qualified funeral trusts and preneed 1133
funeral contract trusts established pursuant to sections 4717.31 1134
to 4717.38 of the Revised Code that are not qualified funeral 1135
trusts, endowment and perpetual care trusts, qualified settlement 1136
trusts and funds, designated settlement trusts and funds, and 1137
trusts exempted from taxation under section 501(a) of the Internal 1138
Revenue Code. 1139

       Sec. 5747.055.  (A) AsA taxpayer who deducted an amount 1140
under division (A)(29) of section 5747.01 of the Revised Code for 1141
a taxable year may not claim a credit under this section for that 1142
taxable year.1143

       As used in this section "retirement income" means retirement 1144
benefits, annuities, or distributions that are made from or 1145
pursuant to a pension, retirement, or profit-sharing plan and 1146
that:1147

       (1) In the case of an individual, are received by the 1148
individual on account of retirement and are included in the 1149
individual's adjusted gross income;1150

       (2) In the case of an estate, are payable to the estate for 1151
the benefit of the surviving spouse of the decedent and are 1152
included in the estate's taxable income.1153

       (B) A credit shall be allowed against the tax imposed by 1154
section 5747.02 of the Revised Code for taxpayers who received 1155
retirement income during the taxable year. Only one such credit 1156
shall be allowed for each return, and the amount of the credit 1157
shall be computed in accordance with the following schedule, 1158
subject to the limitation provided in division (F) of this 1159
section:1160

AMOUNT OF RETIREMENT INCOME RECEIVED CREDIT FOR THE 1161
DURING THE TAXABLE YEAR TAXABLE YEAR 1162
$500 or less $ 0 1163
Over $500 but not more than $1,500 $ 25 1164
Over $1,500 but not more than $3,000 $ 50 1165
Over $3,000 but not more than $5,000 $ 80 1166
Over $5,000 but not more than $8,000 $130 1167
Over $8,000 $200 1168

       (C) At the election of a taxpayer who receives a lump-sum 1169
distribution from a pension, retirement, or profit-sharing plan 1170
within one taxable year, the credit allowed by this section for 1171
that year shall be computed as follows:1172

       (1) Divide the amount of retirement income received during 1173
the taxable year by the taxpayer's expected remaining life on the 1174
last day of the taxable year, as shown by annuity tables issued 1175
under the provisions of the Internal Revenue Code and in effect 1176
for the calendar year that includes the last day of the taxable 1177
year;1178

       (2) Using the quotient thus obtained as the amount of 1179
retirement income received during the taxable year, compute the 1180
credit for the taxable year in accordance with division (B) of 1181
this section;1182

       (3) Multiply the credit thus obtained by the taxpayer's 1183
expected remaining life. The product thus obtained shall be the 1184
credit under this division for the taxable year. A taxpayer who 1185
elects to receive a credit under this division is not entitled to 1186
receive a credit under this section for any subsequent year except 1187
as provided in divisions (D) and (E) of this section.1188

       (D) If the credit under division (C) or (E) of this section 1189
exceeds the tax due for the taxable year after allowing for any 1190
other credit that precedes that credit in the order required under 1191
section 5747.98 of the Revised Code, the taxpayer may elect to 1192
receive a credit for each subsequent taxable year. The amount of 1193
the credit for each such year shall be computed as follows:1194

       (1) Determine the amount by which the unused credit elected 1195
under division (C) or (E) of this section exceeded the tax due for 1196
the taxable year after allowing for any preceding credit in the 1197
required order;1198

       (2) Divide the amount of such excess by one year less than 1199
the taxpayer's expected remaining life on the last day of the 1200
taxable year of the distribution for which the credit was allowed 1201
under division (C) or (E) of this section. The quotient thus 1202
obtained shall be the credit for each subsequent year.1203

       (E) If subsequent to the receipt of a lump-sum distribution 1204
and an election under division (C) of this section an individual 1205
receives another lump-sum distribution within one taxable year, 1206
the taxpayer may elect to receive a credit for that taxable year. 1207
The credit shall equal the lesser of:1208

       (1) A credit computed in the manner prescribed in division 1209
(C) of this section;1210

       (2) The amount of credit, if any, to which the taxpayer would 1211
otherwise be entitled for the taxable year under division (D) of 1212
this section times the taxpayer's expected remaining life on the 1213
last day of the taxable year. A taxpayer who elects to receive a 1214
credit under this division is not entitled to a credit under this 1215
section for any subsequent year except as provided in division (D) 1216
of this section.1217

       (F) In the case of a taxpayer who elected to take an 1218
exclusion under division (A)(1) or (3) of former section 5747.01 1219
of the Revised Code based upon the taxpayer's expected remaining 1220
life, and who was entitled immediately preceding the effective 1221
date of this sectionJuly 1, 1983, under division (A)(2) or (3) of 1222
such section to a further exclusion, any credit computed in 1223
accordance with the schedule in division (B) of this section, 1224
including the credit computed under division (C)(2) of this 1225
section, shall not exceed the credit available upon an amount of 1226
retirement income received during the taxable year equal to the 1227
sum of such former exclusion plus four thousand dollars.1228

       (G) The credits allowed by this section shall be claimed in 1229
the order required under section 5747.98 of the Revised Code. The 1230
tax commissioner may require a taxpayer to furnish any information 1231
necessary to support a claim for credit under this section, and no 1232
credit shall be allowed unless such information is provided.1233

       Section 2. That existing sections 5747.01, 5747.02, and 1234
5747.055 of the Revised Code are hereby repealed.1235