Bill would give Ohio a flat tax over two years

Proposed legislation in Ohio would overhaul the state’s tax collection system, which proponents say could increase revenue collections.

Senate Bill 3 aims to establish a flat tax rate for nonbusiness income over two years. The Senate Ways and Means Committee held its first hearing on the bill on Wednesday.

It would reduce the top tax bracket from 3.5% to 3.125% for the 2025 tax year, keeping the bottom bracket at 2.75%. Starting in 2026, the rate would decrease to 2.75% for anyone with state taxable income of $27,350 or more.

The bill does not alter the law requiring annual adjustments to tax brackets for inflation or the business income flat tax, which remains at 3%.

Senator George Lang, R-West Chester, said a flat tax would promote economic growth and increase revenues. He highlighted that Ohio already employs other flat taxes, such as the state sales tax (5.75%) and the gas tax (38.5 cents per gallon).

This proposal has received support from various local and national groups, including Grover Norquist of Americans for Tax Reform, who stated it would benefit the state’s tax collections.