COLUMBUS, Ohio (WCMH) -- Gov. Mike DeWine signed the state's $60 billion budget on Monday night, and while he vetoed 67 items, he kept in the provision that will lower the tax rate for those making more than $100,000 and create a flat income tax of 2.75%.
"This budget continues significant income tax relief for many Ohioans, particularly married couples, with the new flat income tax," DeWine said at a news conference Tuesday morning.
Despite being a focal point of the budget, DeWine didn't spend much time addressing the flat income tax at the news conference.
How Bishop Sycamore scandal led governor to veto part of Ohio’s budgetThe budget lowers the state's highest income tax bracket over the next two years. For tax year 2025, the highest bracket will be reduced from 3.5% to 3.125%. For tax year 2026, everyone will pay a flat 2.75%.
Tax rates for TY 2024
Taxable IncomeTax Rate$0 - $26,0500% of nonbusiness income$26,051 - $100,000$360.69 + 2.75% of excess over $26,050$100,001+$2,394.32 + 3.50% of excess over $100,000Source: Ohio Department of TaxationSupporters of the flat income tax have said it will make Ohio more competitive with neighboring states. Pennsylvania, Indiana, Kentucky, and Michigan all have flat income tax rates.
"I'm extremely pleased that my colleagues and I were able to again reduce the income tax burden on Ohioans by phasing-in the 2.75% flat tax," Senate President Rob McColley said in a statement after the Senate passed the budget. "It's important to point out that the Senate also maintained the exemption for people making $26,050 or less, they will continue to pay ZERO state income taxes."
Policy Matters Ohio is opposed to the flat income tax, stating that the top 1% of earners will receive 40% of the benefit.
Ohio governor approves $600 million in public funds for Cleveland Browns stadium"Ohio lawmakers have enacted a budget that will make teachers and truck drivers pay the same income tax rate as billionaires," Policy Matters Ohio Executive Director Hannah Halbert said in a statement.
The organization also argued that a flat income tax could lead to local governments raising property taxes on residents to cover more public service costs.
"Ohioans are already paying the price for twenty years of income tax cuts for wealthy households," Halbert said. "This budget will make things worse. More public school kids will lose teachers, and more parents will lose jobs because they can't afford consistent childcare. Fewer young families will be able to buy a home. More Ohioans who use food banks will face empty shelves, and fewer Ohioans will get through college without mountains of debt. All of these are consequences of choices made by Ohio legislatures to craft a revenue policy that extracts from the public good to support the wealthy few."
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