Retail purchases will cost a bit more come Sunday when shoppers across Ohio will see a one-quarter percent sales tax increase.
The state rate will rise from 5.5 percent to 5.75 percent, or 25 cents for every $100 spent — applying to vehicles, electronics, clothing and other goods.
In Summit and Medina counties, the sales tax will go from 6.5 percent to 6.75 percent.
The rate will increase to 7 percent in Portage and will be 6.5 percent in Stark and Wayne counties.
Cuyahoga County will jump to 8 percent sales tax.
Depending on your purchase, the 0.25 percent increase could make a bigger dent in your wallet. A $10 purchase will see a 3 cent increase while a $500 washing machine would see a $1.25 increase and a $30,000 car would see a $75 increase.
Ohio lawmakers approved the increase as part of the state’s $62 billion, two-year state operating budget. The increase is part of a larger package of tax adjustments that will reduce overall business and individual taxes by an estimated $2.7 billion over the next three years. That includes a 10 percent cut to the personal income tax that will be phased in starting Sunday.
The research group Policy Matters Ohio, based in Cleveland, has estimated that the income-tax cuts would result in the top 1 percent of Ohio wage earners on average receiving $6,000 a year while the bottom fifth of wage earners would have to pay $12 a year.
During the state budget debate this year, the group proposed that Ohio offer a sales tax credit for lower income families as a targeted way to help offset some of the impact of tax changes on poorer Ohioans. Five states offer such credits.
Ohio Association of Second Harvest Foodbanks executive director, Lisa Hamler-Fugitt, one of the state’s leading advocates for the poor, countered such arguments at an event this week with praise for Republican Ohio Gov. John Kasich’s efforts toward helping the needy.
Besides his advocacy for Medicaid expansion, Hamler-Fugitt said the governor’s tax reform package helped lead to the creation of an earned-income tax credit that helps the low-income families targeted for help by her organization.
“Although the sales tax is increasing, the benefit of the EITC for those we serve is without question a net positive,” she said.
The Ohio Department of Taxation estimates that 35 percent of an average Ohio family’s spending is subject to the sales tax. Groceries, housing, medicines, education and many other purchases are exempt from sales taxes. Even with the latest change — Ohio’s first increase since 2003 — the state’s rate is still lower than about half the U.S. states.
Ohio first enacted a sales tax in 1935. The rate then was 3 percent. The rate rose to 4 percent in 1967 and to 5 percent in 1981, according to information from the state.
In 2003, state lawmakers temporarily tacked a penny onto the tax — raising the rate to 6 percent for the next two years. In 2005, it was dropped to 5.5 percent.