To amend sections 718.01, 5747.01, and 5748.01 of the Revised Code to exempt tips from state, municipal, and school district income taxes.
Summary
HB209 would amend Ohio’s municipal income tax, state income tax, and school district income tax statutes to exclude “tips” from taxable income. In the bill text, tips are added to the list of exempt income under the municipal income tax code and are also deducted from Ohio adjusted gross income and school district taxable income, so that tipped earnings would not be subject to those state and local income taxes. The bill applies to taxable years ending on or after its effective date.
The measure is framed as a tax relief bill for workers who receive gratuities, such as restaurant, hospitality, personal service, and other tipped employees. Because Ohio’s income tax definitions flow through to municipal and school district taxation, the change would affect not only the state return but also local income tax calculations and school district income tax where applicable. The bill also makes conforming changes to the statutory definitions used in Chapters 718, 5747, and 5748 of the Revised Code.
Impact
HB209 would change Ohio tax law by expressly excluding tips from taxable income for state, municipal, and school district income tax purposes. It would amend the definitions of exempt income and deductions in the municipal and state income tax chapters, and it would revise the school district income tax definition of taxable income so that tips are not included in the tax base. The practical effect would be to reduce income tax liability for tipped workers and to reduce tax revenue for the state and for local governments and school districts that rely on income tax collections.
Sentiment
The bill appears to have a generally favorable, pro-worker policy rationale, with bipartisan-looking sponsorship and no recorded committee opposition or votes in the materials provided. Its introduction suggests support for tax relief targeted at tipped workers, and the caption makes the purpose straightforward and easy to understand. Because there are no committee transcripts or vote records available, there is no documented debate in the provided context, but the bill’s framing indicates a positive reception among its sponsors and likely supporters of tax reduction for service workers.
Contention
The main policy issue is revenue loss and the broader tax-preference question: exempting tips would narrow the tax base for state, municipal, and school district income taxes, which could concern local governments, school districts, and fiscal conservatives. Another possible point of contention is fairness and administrability—supporters may view tips as irregular compensation that should not be taxed, while opponents may argue that excluding one category of wages creates complexity and unequal treatment among workers. No specific objections are recorded in the provided transcripts or votes, so these concerns are inferred from the bill’s structure rather than documented debate.