According to IRS and Census data, Ohio lost about $23 billion in annual adjusted gross income (AGI) from 1992 to 2014 due to residents moving to other states. Prior to 2013, Ohio had state income tax rates ranging from 0.587 percent (on incomes of more than $5,100) to 5.925 percent (beginning at $104,200) with a $1,650 personal exemption per individual. In July 2013, however, Gov. John Kasich (R) and the General Assembly passed a significant, $2.7 billion tax cut package that included a reduction in state income tax rates, phased in over three years. From 2013 to 2014 tax rates were reduced 9 percent, thus lowering the bottom rate to 0.534 percent and the top rate to 5.392 percent. With these tax cuts, how did Ohio compare to neighboring states in 2014?
About the NCPA’s State Tax Calculator. The NCPA’s State Tax Calculator (www.whynotmove.org) is a tool to help people determine the change in their tax burden if they move from one state to another. The State Tax Calculator is not a typical cost-of-living calculator. The software is based on a proprietary financial planning model developed by economist and Boston University Professor Laurence Kotlikoff.
The State Tax Calculator produces results based on the economic theory that households manage their finances so as to smooth out their discretionary spending over their lifetimes. To make the calculator easy to use, there are also built-in assumptions about wages and investments:
- Wage/business income is the same in both states.
- Earnings during the working years will increase each year at the assumed rate of inflation of 3 percent.
- Any money invested in retirement accounts or regular savings accounts will grow at 4 percent per year.