Supreme Court Decision May Benefit Ohio Businesses

In May, the United States Supreme Court reached a decision that could have far reaching effects for Ohio business owners earning income in multiple states.  In Comptroller of the Treasurer of Maryland v. Wynne, the court reached a 5-4 decision that Maryland’s personal income taxing regime was unconstitutional under the dormant Commerce Clause.

The Wynnes owned an S Corporation that earned income in and paid tax to multiple states.  Under Maryland tax law, they received a personal income tax credit for taxes they paid to other states, but were denied a tax credit for county income taxes imposed on the same income.  According to the Court, this resulted in double taxation on the income earned out of state, effectively creating a state tariff on out-of-state income. Under this taxing scheme, Maryland law violated the dormant Commerce Clause by discriminating against intrastate versus interstate income.

What could this mean for Ohio residents?

In Ohio, residents receive a tax credit for personal income taxes paid to other states.  However, Ohio school district taxes are based on an individual’s adjusted gross income with no apportionment allowance for income earned and taxed in other states.  In addition, many municipalities do not permit a tax credit for income earned and taxed in other jurisdictions.

The question is whether Ohio’s municipality and school district taxes will be viewed as piggyback taxes to the state income tax.  If so, then the Wynne decision made clear that double taxation occurs when the taxpayer is not given credit for income taxes paid to another state. It is just a matter of time before this issue is tested in the courts. We will keep you updated as the issue unfolds.

If you have questions on the Wynne decision and how it may impact you and your business please contact Terri Brunsdon at, or your Day Ketterer attorney at