Ohio’s governor vetoed part of a bill that would have expanded Ohio sales tax obligations to internet-based service platforms and likely triggered litigation from the e-commerce industry.

Gov. Mike DeWine (R) line-item vetoed an operating budget bill provision July 18 that would have made vendors that connect consumers through “technology platforms” collect and remit Ohio’s 5.75% sales tax. That could have affected currently un-taxed tech companies like home-sharing platform Airbnb Inc. and home-service company Thumbtack Inc.

The veto followed a Bloomberg Tax report analyzing how a Senate version of the budget bill may have retroactively applied...