To amend section 5747.02 of the Revised Code to phase-down the state income tax to a flat rate of 2.75% over two years.
Summary
SB 3 would amend Ohio’s personal income tax statute to phase down the state income tax to a flat 2.75% rate over two years. The bill keeps the existing zero-tax threshold for lower incomes, but restructures the rate schedule so that, beginning in 2026 and thereafter, individuals would pay 2.75% on taxable income above the threshold, while the current higher brackets would be eliminated. The bill also reduces the tax rate on taxable business income to 3% and preserves existing rules for trusts and estates, with corresponding adjustments to bracket thresholds and tax calculations during the phase-down period.
The measure also directs the Tax Commissioner not to make the usual inflation-based adjustments to the income thresholds in 2025 and 2026, which would freeze those amounts during the transition. In addition, it retains the existing framework for credits, trust taxation, and refunds for taxpayers below the taxable threshold. Overall, the bill is a broad restructuring of Ohio’s income tax code aimed at simplifying the rate structure and lowering rates for many taxpayers.
Impact
If enacted, SB 3 would amend section 5747.02 of the Revised Code and repeal the existing version of that section, replacing Ohio’s graduated individual income tax with a single 2.75% rate above the no-tax threshold after the phase-down period. It would also change the tax treatment of taxable business income, alter bracket and threshold calculations for estates and trusts, and temporarily suspend inflation indexing of the income thresholds for 2025 and 2026. The bill would affect individual taxpayers, business-income taxpayers, trusts, estates, and the Tax Commissioner’s annual adjustment duties.
Sentiment
Based on the bill’s sponsors and cosponsors, the proposal appears to have support among lawmakers favoring tax reduction and simplification. The bill text frames the change as providing relief to taxpayers and supporting a flatter tax structure. No committee transcript or vote record was provided, so there is no recorded debate or formal vote history in the supplied materials to indicate broader legislative sentiment.
Contention
The main likely point of contention is the fiscal effect of reducing and flattening the income tax, including potential impacts on state revenue, school funding, and local government support, since the statute expressly ties the tax to those purposes. Another likely issue is the decision to freeze inflation adjustments for two years, which could affect bracket movement and taxpayer liability during the transition. Supporters are the bill’s sponsors and cosponsors, while opposition would likely come from lawmakers or stakeholders concerned about revenue loss, distributional effects, or the adequacy of funding for public services.
To amend sections 3517.12, 3517.13, and 3517.155 of the Revised Code to modify the Campaign Finance Law regarding foreign nationals and statewide initiatives and referenda and to declare an emergency.
To amend sections 3517.12, 3517.13, and 3517.155 of the Revised Code to modify the Campaign Finance Law regarding foreign nationals and statewide initiatives and referenda and to declare an emergency.
To amend sections 3505.01 and 3505.10 of the Revised Code to modify the deadline for a political party to certify its nominees for President and Vice-President to the Secretary of State.
To delay the deadline for a major political party to certify its presidential and vice presidential candidates to the Secretary of State for the 2024 general election.