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Norwood sees modest earnings tax growth in 2024; committee adopts conservative 2025 estimate of $22.75 million
Summary
Finance staff reported a 2.6% year-over-year increase in earnings tax receipts for 2024, with individual filings up 17% and net profit receipts down from 2023. Staff proposed a five-year forecast that sets 2025 earnings tax estimates at $22,750,000 and projects a reduced net profit estimate of $4,250,000.
Finance staff presented a comparison of 2024 earnings tax receipts with 2023 and proposed estimates for 2025 through 2029 as part of the Financial Recovery Plan (FRP).
Staff reported a year-over-year increase in total earnings tax receipts of about $584,000, a 2.6% increase from 2023. Individual filings increased by roughly $241,000 (about 17%), which staff attributed in part to a postcard filing campaign and improved compliance using tenant lists from large apartment complexes. By contrast, net profit collections were lower in 2024 compared with 2023; staff said net profit was roughly 10% below 2023 levels.
Staff described several operational drivers: increased compliance outreach to property owners for tenant lists (factory 52 and Brookwood were cited), work-from-home payroll shifts that change withholding patterns, and occasional payroll-software miscoding that routes withholding to Cincinnati instead of Norwood. Staff said these factors explain part of the mix between withholding, individual filings and net profit receipts.
For 2025 the committee reviewed staff's forecast: total earnings tax receipts estimated at $22,750,000; an estimated net profit tax of $4,250,000 (a roughly 5% decrease from the most recent year); individual tax receipts estimated at about $1,800,000; and a modest withholding increase of about 3%. Staff called the 2025 projection conservative, citing recent volatility in net profit receipts and one-time large payments in prior years.
Staff also noted the city earned more than $1 million in interest income in 2024. Committee members asked clarifying questions about large payers and the limitations of the city's reporting software (MITS) and encouraged continued compliance work and consideration of an extra tax clerk as part of the FRP.
