Leading the Midwest with Flat, Simple Taxes: How House Bill 1 Will Benefit Ohioans
By State Representative Adam Mathews (R-Lebanon), 56th Ohio House District
WARREN COUNTY, OH-- Last month I introduced House Bill 1, which cuts income taxes for all Ohioans currently paying taxes, introduces a flat income tax system, and simplifies property taxes both now and in the future. This bill provides opportunities for Ohio families and businesses to thrive and makes Ohio a key economic model of the Midwest.
I introduced House Bill 1 with four goals in mind:
- lower all Ohio income taxes to a flat rate of 2.75%,
- disentangle our property taxes from our income taxes,
- protect homeowners both now and in the future,
- and ensure our local communities receive the quality services they expect.
A flat tax system will encourage Ohio families and businesses to move to and stay in our great state. Ohio is surrounded by states that have implemented a flat tax rate – Kentucky, Indiana, Illinois, and Michigan. As it stands, House Bill 1’s 2.75% tax rate would be the lowest in the region.
In its current version, House Bill 1 disentangles our property and income taxes by removing a 10% rollback and giving more local control over tax policy. This bill will encourage every Ohioan to stay and work in Ohio regardless of their income.
We aim to help our lower-income households by ensuring that families making $26,000 a year would newly be free of any state income tax. On the other end, higher-income families are increasingly mobile. Regardless of their career, we want those who can pick up and move to stay here in Ohio.
To protect homeowners against future tax increases, this legislation reduces the taxable value in property taxes from 35% of appraised value to 31.5%. It also accounts for inflation, so homeowners would be protected if and when property values fluctuate. These two steps finally realize a property tax cut without shielding the true cost of property taxes from the taxpayers.
Again, we maintain our focus on those at the margins, strengthening homestead protections for our seniors while also shifting our 2.5% reduction credit to a flat $125, benefiting smaller homes and those entering the market.
Finally, we want to ensure local communities relying on these property taxes can provide for their people. Over the last 40 years, the state has shielded property owners from the full cost of their property taxes. We want to help these local taxing entities through the transition that would come with House Bill 1.
Since 2020, more than 20 other states have cut their rates. We have an opportunity with House Bill 1 to lead the Midwest with a lower flat tax rate than all neighboring states. House Bill 1 benefits all Ohioans by promoting economic growth, simplifying the tax code, and keeping earnings in the pockets of Ohioans and their communities.
House Bill 1 received its third hearing on Tuesday, March 14. As it goes through the legislative process, the updated status can be found here.