Overview

• Gov. Mike DeWine signed a two-year, $60 billion state budget on July 1 that includes more than $1 billion in income tax cuts.
• The plan reduces Ohio’s top income tax rate from 3.5 percent to 3.125 percent for 2025 and establishes a 2.75 percent flat rate in 2026 while keeping incomes up to $26,050 tax-free.
• Although he vetoed 67 budget items, DeWine preserved the flat-tax provision and zero-percent threshold for lower earners.
• Proponents, led by Senate President Rob McColley, argue the flat tax simplifies the code and boosts Ohio’s competitiveness with flat-tax neighbors.
• Policy Matters Ohio and other critics contend the top 1 percent would receive 40 percent of the benefits and warn of potential local revenue shortfalls that could force property tax hikes or service cuts.