To amend sections 718.01, 718.81, and 718.84 of the Revised Code to remove a five-year limit on municipal income tax net operating loss carry-forwards.
Summary
HB642 would amend Ohio’s municipal income tax law to remove the current five-year cap on carrying forward net operating losses (NOLs) for municipal income tax purposes. Under current law, taxpayers generally may use a municipal NOL deduction only for the taxable year in which the loss is incurred and the next five taxable years, subject to other limitations. The bill would change sections 718.01, 718.81, and 718.84 of the Revised Code so that municipal NOL carryforwards could be used without that five-year expiration, aligning municipal tax treatment more closely with an indefinite carryforward model.
The bill also updates related definitional and administrative provisions in Chapter 718 governing municipal income taxation. It preserves the existing framework for calculating municipal taxable income, exempt income, adjusted federal taxable income, and related concepts, while revising references so the new NOL treatment applies to taxable years ending on or after the effective date. The bill is framed as a targeted tax change rather than a broad rewrite of municipal income tax law, but it would affect how losses are tracked and applied by taxpayers, municipal corporations, and tax administrators.
Impact
HB642 would directly affect Ohio municipal income tax law by eliminating the five-year limitation on net operating loss carryforwards for losses subject to Chapter 718. This would allow businesses and other taxpayers with municipal net operating losses to offset future municipal taxable income for a longer period, potentially reducing municipal tax liability in later profitable years. The bill amends sections 718.01, 718.81, and 718.84 and repeals the existing versions of those sections, with the amendment applying to taxable years ending on or after the effective date. Municipal tax administrators and the Ohio tax commissioner would need to apply the revised carryforward rules in administering returns, audits, and information-sharing provisions.
Sentiment
The available context shows no recorded committee testimony or floor votes, and the bill was still at the introduction stage in the House Ways and Means Committee. Based on the bill’s narrow tax-relief purpose, the apparent sentiment is neutral to favorable for taxpayers who have accumulated municipal NOLs, especially businesses with long recovery periods. Because there is no discussion transcript or vote history, there is no documented opposition or support in the provided materials.
Contention
The main policy issue is the removal of the five-year limit on municipal NOL carryforwards. Supporters would likely view the change as a fairness and competitiveness measure that lets businesses fully use losses over time, while opponents may worry about reduced municipal revenue and the administrative complexity of tracking losses indefinitely. The bill’s impact would be most significant for businesses and pass-through entities with volatile income, and municipalities that rely on income tax collections may be concerned about delayed or reduced receipts.
To amend sections 3517.12, 3517.13, and 3517.155 of the Revised Code to modify the Campaign Finance Law regarding foreign nationals and statewide initiatives and referenda and to declare an emergency.
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To amend sections 3517.12, 3517.13, and 3517.155 of the Revised Code to modify the Campaign Finance Law regarding foreign nationals and statewide initiatives and referenda and to declare an emergency.
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