The highest marginal income tax rate in Ohio is 5.39%. That’s on top of the highest federal marginal tax rate of 39.6%. Many southern states, like Florida, are more favorable jurisdictions. In fact, Florida has no income tax. In recent years, Ohio has attempted to become a more favorable tax jurisdiction by taking measures such as repealing the Ohio estate tax. Now, Ohio has gone one step further by allowing individuals to spend more time in Ohio without being considered a resident for purposes of the Ohio income tax.

We’re often asked by our clients how they can become Florida residents. The real question is when does Ohio consider you a resident. Ohio has a bright line test in determining whether Ohio is your domicile. Starting in 2015, individuals with more than 212 “contact periods” will be considered residents of Ohio and subject to the Ohio income tax. This is up from 182 “contact periods” in 2014. This means that a person may spend up to seven months in the state without being subject to Ohio incomes taxes.

If a person has more than 212 contact periods in Ohio, then that person is presumed to be an Ohio resident for purposes of the income tax. The presumption can be rebutted by clear and convincing evidence.

If you are an Ohio resident and you desire to change your residency, there are certain measures that can be taken, with your new state, to help establish residency outside of Ohio. These include:

• Register to vote,• Open bank accounts,• Register automobiles and boats,• File a final income tax return with Ohio,• Obtain a new driver’s license,• Change mailing addresses on your bills, and• Keep track of how much time is spent in Ohio.

In case of an audit, detailed travel records and receipts should be kept.

Rolling the Juice Out of the Buckeye StateMany of our Ohio clients “re-locate” to states like Florida, which have historically had less taxes. If you’re trying to avoid Ohio income tax, it’s important to keep up on the rules because Ohio is loosening the squeeze on the oranges.

Want to know more about Ohio residency issues?

Contact James A. Singler for an appointment or to set up a special presentation on this topic. Jim is a

Partner at Calfee, Halter & Griswold, LLP. He can be reached at (513) 693-4875

or by email at jsingler@calfee.com.

Historically considered a less than favorable tax jurisdiction, the State

of Ohio is loosening its grip on taxpayers. In 2015, a person may

spend up to seven months in the State of Ohio without being considered a

resident for tax purposes.