In March 2011, Ohio's governor signed a bill bringing Ohio into complete conformity with federal tax codes. This bill not only adjusted tax brackets for inflation, but also introduced new deductions, allowances and other changes. For example, taxpayers can claim a larger personal and dependent deduction for tax year 2010 than they could in previous years. Many of Ohio's traditional tax deductions also remain unchanged.
Spousal Death and Disability
Two deductions exist for individuals whose spouse died during the year. First, the Ohio Marital Deduction essentially cancels out the estate tax for an individual whose spouse died during the previous year. This deduction equals the net value of assets passed onto the spouse, essentially reducing the estate tax to zero. Second, you can deduct benefits received from a qualified survivorship plan. The disability deduction allows you to deduct benefits received from your employee disability plan as a result of a permanent physical or mental disability.
Medical and Health
Medical and health care deductions include deductions for medical savings accounts and health insurance premiums. For medical savings account deposits, individuals can deduct up to $4,197 for the 2010 tax year and married couples up to $8,394. You can also generally deduct any health care insurance premiums you paid during the year. You can deduct unreimbursed long-term care, accident and health insurance premiums for yourself or your dependents that an employer did not subsidize and that you did not take a deduction for on your federal return. You can also deduct excess medical expenses like prescription medications and hospital costs. You cannot take the health insurance premium deductions if you were eligible for Medicare or Medicaid.
Military personnel can deduct all of the pay they earned while stationed outside the state of Ohio as long as the amount is part of their federal annual gross income, or AGI. You can also generally deduct military retirement income you receive; if you're a surviving spouse, you can deduct any benefits you receive as part of the Survivor Benefit plan. You can also deduct benefits received from the military injury relief fund. For Ohio National Guard members, you can deduct any Ohio National Guard reimbursements for group life insurance premiums. If you're a beneficiary of an Ohio National Guard member, you can deduct money you receive as death benefit payments.
Personal and Dependent
You can claim $1,600 for each personal and dependent exemption. You can claim a $1,600 deduction for both you and your spouse and for each child or person for whom you provided support and claimed on your federal tax returns. Every person in Ohio can claim at least one $1,600 personal deduction, even if they are claimed as a dependent on another person's tax return.
At the time of publication, you can deduct up to $2,000 per beneficiary for contributions made to the Ohio Tuition Trust Authority's College Advantage 529 Savings Plan. If you paid more than $2,000 per beneficiary for the tax year, you can save any unused portions of the deduction and deduct them on next year's tax return. In addition, you can only deduct these amounts if they did not qualify as a deduction on your federal tax return.
The state of Ohio allows various other deductions, which are typically outlined in the tax instruction booklet. For example, you can deduct interest earned from medical savings accounts and amounts you receive from state and local tax refunds. Other deductions include wage and salary expenses if you're an employer; up to $10,000 for qualified organ donation expenses, such as travel and lodging; interest income from the sale of Ohio public obligations; and refunds or reimbursements you originally claimed on prior year's federal tax returns.