Ohio Could Soon Be The 10th State in U.S. To Eliminate Income Tax

Ohio lawmakers are looking to get rid of the state's income tax by the year 2030. Two bills have been introduced that seek to eliminate income tax in phases. The reason? Bring more businesses and people to Ohio. But, the legislation is raising a lot of questions.

What Are The Plans To Eliminate Ohio State Tax?

According to the Cincinnati Enquirer, lawmakers look to join nine other states with no state income tax. Two bills have been introduced. One would implement a flat tax with everyone paying the same rate. The second would slowly decrease rates. GOP lawmakers say each plan would shrink the tax starting this year until it's down to zero by 2030. Under Ohio law, people making less than $26,000 don't pay income tax. Those making between $26,000 and $100,000 pay 2.75%. Anyone who makes more than that pays 3.5%.

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Ohio's state income tax has been significantly scaled back over the past two decades. Supporters said it's a way to entice more businesses and people to move to the state. One bill looks to eliminate the commercial activity tax on companies operating in Ohio. But across the aisle, the Ohio House Finance Committee is skeptical about what this might mean for the state.

What Would Removing The State Income Tax Mean For Ohio?

Opponents of the bills believe the legislation would hurt Ohio's middle-class and lower-income residents. Critics are skeptical and say significant tax cuts could lead to a state budget crisis and slash spending on programs that residents rely on. The Ohio Department of Taxation said it has collected $13 billion in state individual income taxes in 2022. Ohio income tax is a vital source of funding for schools and Medicaid. The bill's sponsors will now host dozens of town hall meetings to get feedback from Ohio residents.