As Remote Work Persists, Ohio Cities Brace for Tax Revenue Losses

Officials in Dayton, Ohio and nearby cities remain concerned about a potential loss of income tax revenue from remote workers, even though projections that work-from-home could cost the city up to $20 million in revenue have not materialized this year. In fact, as Cornelius Frolik writes in the Dayton Daily News, “Dayton’s income tax collections were up 7.5% through the third quarter of this year, compared to the same period in 2021, according to city budget documents.”

Dayton workers who live in other jurisdictions are eligible for tax refunds, while employers are required to track remote work and withhold taxes accordingly. “Many employers have never needed to track where their employees live for tax purposes, and it can take time to figure out a good system to do that,” Frolik points out.

“The city believed the work-from-home impact would be more significant and would occur more swiftly, but it is taking time for businesses to create processes and procedures to track and account for remote employees, said Joe Parlette, Dayton’s deputy city manager.” As employers settle on new remote work patterns and set up new processes, Ohio cities are still bracing for potential revenue losses of 3 to 5 percent.