Allow state income tax deduction for overtime wages

As Introduced

136th
General Assembly

Regular
Session
H. B. No. 39

2025-2026

Representatives Fischer, Santucci

Cosponsors: Representatives Ferguson,
Lorenz, Thomas, D., Williams, King, Gross, Dean, Creech, Schmidt,
Johnson, Brennan, Miller, K., Klopfenstein

A
BILL

To
amend section 5747.01 of the Revised Code
to
allow a state income tax deduction for overtime wages.

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

Section
1.
That
section 5747.01 of the Revised Code be amended to read as follows:

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 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.

(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.

(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 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 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 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.

(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 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 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 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 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.

(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;

(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, 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.

(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 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 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.

(44)
Deduct, for the first taxable year ending after the effective date of
this amendment and for each of the following seven taxable years,
overtime wages paid in accordance with section 4111.03 of the Revised
Code or 29 U.S.C. 207, but only to the extent not otherwise deducted
or excluded in computing federal or Ohio adjusted gross income for
that taxable year.

(B)
"Business income" means income, including gain or loss,
arising from transactions, activities, and sources in the 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.

(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 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.

(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 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 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 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.

(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 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 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, 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 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.

(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, 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 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 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 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
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 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
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 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 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)
,
and (44)

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.

Section
2.
That
existing section 5747.01 of the Revised Code is hereby repealed.

Section
3.
The
amendment by this act of section 5747.01 of the Revised Code applies
to taxable years ending on or after the effective date of this
section.

Section
4.
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.