Read the full stored bill text
As Introduced
136th
General Assembly
Regular
Session
S. B. No. 3
2025-2026
Senators Lang, Huffman
Cosponsors: Senators Roegner,
Romanchuk, Brenner, O'Brien, Wilson, Schaffer, Wilkin
A
BILL
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.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section
1.
That
section 5747.02 of the Revised Code be amended to read as follows:
Sec.
5747.02.
(A)
For the purpose of providing revenue for the support of schools and
local government functions, to provide relief to property taxpayers,
to provide revenue for the general revenue fund, and to meet the
expenses of administering the tax levied by this chapter, there is
hereby levied on every individual, trust, and estate residing in or
earning or receiving income in this state, on every individual,
trust, and estate earning or receiving lottery winnings, prizes, or
awards pursuant to Chapter 3770. of the Revised Code, on every
individual, trust, and estate earning or receiving winnings on casino
or sports gaming, and on every individual, trust, and estate
otherwise having nexus with or in this state under the Constitution
of the United States, an annual tax measured as prescribed in
divisions (A)(1) to (4) of this section.
(1)
In the case of trusts, the tax imposed by this section shall be
measured by modified Ohio taxable income under division (D) of this
section and levied in the same amount as the tax is imposed on
estates as prescribed in division (A)(2) of this section.
(2)
In the case of estates, the tax imposed by this section shall be
measured by Ohio taxable income. The tax shall be levied at the rate
of 1.38462% for the first twenty-six thousand fifty dollars of such
income
and,
for
taxable
years beginning in 2024, twenty-six thousand seven hundred dollars of
such income for taxable years beginning in 2025, and twenty-seven
thousand three hundred fifty dollars of such income for taxable years
beginning in 2026 and thereafter. For
income
in excess of that amount, the tax shall be levied at the same rates
prescribed in division (A)(3) of this section for individuals.
(3)
In the case of individuals, the tax imposed by this section on income
other than taxable business income shall be measured by Ohio adjusted
gross income, less taxable business income and less an exemption for
the taxpayer, the taxpayer's spouse, and each dependent as provided
in section 5747.025 of the Revised Code. If the balance thus obtained
is
equal
to or less
not
more
than
twenty-six
thousand fifty dollars
the
applicable dollar amount described in division (A)(2) of this
section
,
no tax shall be imposed on that balance. If the balance thus obtained
is greater than
twenty-six thousand fifty dollars
that
amount
,
the tax is hereby levied as follows:
(a)
For
taxable years beginning in 2023:
1
2
A
OHIO
ADJUSTED GROSS INCOME LESS TAXABLE BUSINESS INCOME AND EXEMPTIONS
(INDIVIDUALS) OR MODIFIED OHIO TAXABLE INCOME (TRUSTS) OR OHIO
TAXABLE INCOME (ESTATES)
TAX
B
More
than $26,050 but not more than $100,000
$360.69
plus 2.75% of the amount in excess of $26,050
C
More
than $100,000 but not more than $115,300
$2,394.32
plus 3.688% of the amount in excess of $100,000
D
More
than $115,300
$2,958.58
plus 3.75% of the amount in excess of $115,300
(b)
For taxable years beginning in 2024
and thereafter
:
1
2
A
OHIO
ADJUSTED GROSS INCOME LESS TAXABLE BUSINESS INCOME AND EXEMPTIONS
(INDIVIDUALS) OR MODIFIED OHIO TAXABLE INCOME (TRUSTS) OR OHIO
TAXABLE INCOME (ESTATES)
TAX
B
More
than $26,050 but not more than $100,000
$360.69
plus 2.75% of the amount in excess of $26,050
C
More
than $100,000
$2,394.32
plus 3.5% of the amount in excess of $100,000
(b)
For taxable years beginning in 2025:
1
2
A
OHIO
ADJUSTED GROSS INCOME LESS TAXABLE BUSINESS INCOME AND EXEMPTIONS
(INDIVIDUALS) OR MODIFIED OHIO TAXABLE INCOME (TRUSTS) OR OHIO
TAXABLE INCOME (ESTATES)
TAX
B
More
than $26,700 but not more than $102,400
$369.69
plus 2.75% of the amount in excess of $26,700
C
More
than $102,400
$2,451.44
plus 3.125% of the amount in excess of $102,400
(c)
For taxable years beginning in 2026 and thereafter, $378.69 plus
2.75% of the amount in excess of $27,350.
(4)(a)
In the case of individuals, the tax imposed by this section on
taxable business income shall equal three per cent of the result
obtained by subtracting any amount allowed under division (A)(4)(b)
of this section from the individual's taxable business income.
(b)
If the exemptions allowed to an individual under division (A)(3) of
this section exceed the taxpayer's Ohio adjusted gross income less
taxable business income, the excess shall be deducted from taxable
business income before computing the tax under division (A)(4)(a) of
this section.
(5)
Except as otherwise provided in this division, in August of each
year, the tax commissioner shall make a new adjustment to the income
amounts prescribed in divisions (A)(2) and (3) of this section by
multiplying the percentage increase in the gross domestic product
deflator computed that year under section 5747.025 of the Revised
Code by each of the income amounts resulting from the adjustment
under this division in the preceding year, adding the resulting
product to the corresponding income amount resulting from the
adjustment in the preceding year, and rounding the resulting sum to
the nearest multiple of fifty dollars. The tax commissioner also
shall recompute each of the tax dollar amounts to the extent
necessary to reflect the new adjustment of the income amounts. To
recompute the tax dollar amount corresponding to the lowest tax rate
in division (A)(3) of this section, the commissioner shall multiply
the tax rate prescribed in division (A)(2) of this section by the
income amount specified in that division and as adjusted according to
this paragraph. The rates of taxation shall not be adjusted.
The
adjusted amounts apply to taxable years beginning in the calendar
year in which the adjustments are made and to taxable years beginning
in each ensuing calendar year until a calendar year in which a new
adjustment is made pursuant to this division. The tax commissioner
shall not make a new adjustment in any year in which the amount
resulting from the adjustment would be less than the amount resulting
from the adjustment in the preceding year.
(B)
If the director of budget and management makes a certification to the
tax commissioner under division (B) of section 131.44 of the Revised
Code, the amount of tax as determined under divisions (A)(1) to (3)
of this section shall be reduced by the percentage prescribed in that
certification for taxable years beginning in the calendar year in
which that certification is made.
(C)(1)
The tax imposed by this section on a trust shall be computed by
multiplying the Ohio modified taxable income of the trust by the
rates prescribed by division (A) of this section.
(2)
A resident trust may claim a credit against the tax computed under
division (C) of this section equal to the lesser of (a) the tax paid
to another state or the District of Columbia on the resident trust's
modified nonbusiness income, other than the portion of the resident
trust's nonbusiness income that is qualifying investment income as
defined in section 5747.012 of the Revised Code, or (b) the effective
tax rate, based on modified Ohio taxable income, multiplied by the
resident trust's modified nonbusiness income other than the portion
of the resident trust's nonbusiness income that is qualifying
investment income. The credit applies before any other applicable
credits.
(3)
Any credit authorized against the tax imposed by this section applies
to a trust subject to division (C) of this section only if the trust
otherwise qualifies for the credit. To the extent that the trust
distributes income for the taxable year for which a credit is
available to the trust, the credit shall be shared by the trust and
its beneficiaries. The tax commissioner and the trust shall be guided
by applicable regulations of the United States treasury regarding the
sharing of credits.
(D)
For the purposes of this section, "trust" means any trust
described in Subchapter J of Chapter 1 of the Internal Revenue Code,
excluding trusts that are not irrevocable as defined in division
(I)(3)(b) of section 5747.01 of the Revised Code and that have no
modified Ohio taxable income for the taxable year, charitable
remainder trusts, qualified funeral trusts and preneed funeral
contract trusts established pursuant to sections 4717.31 to 4717.38
of the Revised Code that are not qualified funeral trusts, endowment
and perpetual care trusts, qualified settlement trusts and funds,
designated settlement trusts and funds, and trusts exempted from
taxation under section 501(a) of the Internal Revenue Code.
(E)
Nothing in division (A)(3) of this section shall prohibit an
individual with an Ohio adjusted gross income, less taxable business
income and exemptions, of
twenty-six
thousand fifty dollars or less
not
more than the applicable amount described in division (A)(2) of this
section
from
filing a return under this chapter to receive a refund of taxes
withheld or to claim any refundable credit allowed under this
chapter.
Section
2.
That
existing section 5747.02 of the Revised Code is hereby repealed.
Section
3.
The
Tax Commissioner shall not make adjustments in 2025 or 2026 to the
income amounts in divisions (A)(2) and (3) of section 5747.02 of the
Revised Code, as otherwise required by division (A)(5) of that
section.