§ 311-15. Exception to the Tax; Exempt Income.

The tax provided for herein shall not be levied upon the following "exempt income":

(a)

Proceeds from welfare benefits, unemployment compensation, pensions, social security benefits, railroad retirement benefits, and retirement benefit payments as defined by the Internal Revenue Service, except to the extent that such amounts are included in the definition of qualifying wages provided in this chapter. As used herein, "unemployment compensation" does not include supplemental unemployment compensation described in section 3402(o)(2) of the Internal Revenue Code;

(b)

Proceeds of sickness, accident, or liability insurance policies, payments from annuities, and similar payments made to an employee or to the beneficiary of an employee under a retirement program or plan, disability payments received from private industry or local, state, or federal governments or from charitable, religious or educational organizations; compensation for personal injury and like reimbursements, excluding compensation paid for loss of profits and salaries or wages or awards for punitive damages;

(c)

Dues, contributions and similar payments received by charitable, religious, educational, or literary organizations, or labor unions, trade or professional associations, lodges and similar organizations;

(d)

Gains from involuntary conversions, interest on federal obligations, items of income subject to a tax levied by the state and that a municipal corporation is specifically prohibited by law from taxing, and income of a decedent's estate during the period of administration except such income derived from the operation of a trade or business;

(e)

Alimony and child support received;

(f)

Compensation for damage to property from insurance proceeds or otherwise;

(g)

Intangible income;

(h)

The military pay or allowances of members of the Armed Forces of the United States or members of their reserve components, including the national guard of any state;

(i)

The income of any religious, charitable, scientific, literary, educational, fraternal or other institutions to the extent such income is derived from tax-exempt real estate, tax-exempt tangible or intangible property, or tax-exempt activities, but income from non-exempt real estate, tangible or intangible personal property, or business activities of a type ordinarily conducted for profit by taxpayers operating for profit shall be taxable. In the event taxable income is generated from real or personal property ownership or an income producing business located both within and without the corporate limits of the Municipality, income shall be apportioned to the Municipality under the method provided in Section 311-17;

(j)

If exempt for federal income tax purposes, fellowship and scholarship grants are excluded from municipal income tax;

(k)

The rental value of a home furnished to a minister of the gospel as part of his or her compensation, or the rental allowance paid to a minister of the gospel as part of his or her compensation, to the extent used to rent or provide a home pursuant to section 107 of the Internal Revenue Code;

(l)

Compensation paid under sections 3501.28 or 3501.36 of the Ohio Revised Code to a person serving as a precinct election official, to the extent that such compensation does not exceed one thousand dollars ($1,000) for the taxable year. Such compensation in excess of one thousand dollars ($1,000) for the taxable year may be subject to municipal taxation, but the payer of such compensation is not required to withhold any municipal income tax from that compensation;

(m)

For tax years prior to January 1, 2016, compensation paid to an employee of a transit authority, regional transit authority, or a regional transit commission created under Chapter 306 of the Ohio Revised Code for operating a transit bus or other motor vehicle for the authority or commission in or through the Municipality, unless the bus or vehicle is operated on a regularly scheduled route, the operator is subject to municipal income tax by reason of residence or domicile in the Municipality, or the headquarters of the authority or commission is located within the Municipality;

(n)

Compensation paid to a nonresident individual for personal services performed by the individual in the Municipality on twelve (12) or fewer days in a calendar year for years prior to January 1, 2016 and twenty (20) or fewer days in a calendar year for years beginning on or after January 1, 2016, except as permitted by Section 311-27 of this chapter. For purposes of this subsection (n), "compensation" means any form of remuneration paid to an employee for personal services;

(o)

Income of a public utility when that public utility is subject to the tax levied under sections 5727.24 or 5727.30 of the Ohio Revised Code. This provision does not apply for purposes of Chapter 5745 of the Ohio Revised Code;

(p)

Employee compensation that is not qualifying wages as defined in Section 311-9-Q of this chapter;

(q)

Compensation paid to a person employed within the boundaries of a United States air force base under the jurisdiction of the United States air force that is used for the housing of members of the United States air force and is a center for air force operations, unless the person is a resident of the Municipality;

(r)

An S corporation shareholder's distributive share of net profits of the S corporation, other than any part of the distributive share of net profits that represents wages as defined in section 3121(a) of the Internal Revenue Code or net earnings from self-employment as defined in section 1402(a) of the Internal Revenue Code;

(s)

Any compensation arising from the grant, sale, exchange, or other disposition of a stock option, the exercise of a stock option, or the sale, exchange, or other disposition of stock purchased under a stock option;

(t)

(i)

For tax years beginning on or after January 1, 2016, except as provided in divisions (ii), (iii), and (iv) of this subsection, qualifying wages described in subsection (b)(i) or (e) of Section 311-27 of this chapter to the extent the qualifying wages are not subject to withholding for municipal income tax under either of those divisions;

(ii)

The exemption provided in division (i) of this subsection does not apply to employees who resided in the Municipality at the time the employee earned the qualifying wages;

(iii)

The exemption provided in division (i) of this subsection does not apply to qualifying wages that an employer elects to withhold under subsection (d)(ii) of Section 311-27 of this chapter;

(iv)

The exemption provided in division (i) of this subsection does not apply to qualifying wages if both of the following conditions apply:

(1)

For qualifying wages described in subsection (b)(i) of Section 311-27 of this chapter, the employee's employer withholds and remits tax on the qualifying wages to the municipal corporation in which the employee's principal place of work is situated, or, for qualifying wages described in subsection (e) of Section 311-27 of this chapter, the employee's employer withholds and remits tax on the qualifying wages to the municipal corporation in which the employer's fixed location is located; and

(2)

The employee receives a refund of the tax described in subsection (t)(iv)(1) of this section on the basis of the employee not performing services in that municipal corporation;

(u)

Compensation paid to a person for personal services performed for a political subdivision on property owned by the political subdivision, regardless of whether the compensation is received by an employee of the subdivision or another person performing services for the subdivision under a contract with the subdivision, if the property on which services are performed is annexed to a municipal corporation pursuant to Ohio Revised Code section 709.023 on or after March 27, 2013, unless the person is subject to such taxation because of residence. If the compensation is subject to taxation because of residence, municipal income tax shall be payable only to the municipal corporation of residence; and

(v)

Income the taxation of which is prohibited by the constitution or laws of the United States.

(Ordained by Emer. Ord. No. 363-2015, § 2, eff. Jan. 1, 2016)