Ohio Senate Proposes Flat Income Tax, Property Tax Changes, School Funding Boost

Ohio Senate Republicans have proposed significant changes to the state's two-year, $60 billion budget, including implementing a flat 2.75% income tax rate starting in 2026, replacing the current tiered system and potentially providing a $1.1 billion tax cut largely benefiting higher earners. The budget also proposes increasing the property tax carry-over cap for public school districts from 30% to 50%, with provisions allowing districts to reserve excess funds for building maintenance and debt service, which aims to offer property tax relief to homeowners. Medicaid funding would face cuts of 1% in 2026 and 1.5% in 2027 under the Senate's plan. The budget includes $600 million for a new Cleveland Browns stadium, shifting from a bond-financed approach to a performance grant funded by state resources. Senate President Rob McColley advocates the flat tax as a pro-growth measure to attract business and spur economic development, while Democratic lawmakers criticize it for disproportionately benefiting the wealthy and placing a heavier burden on lower-income Ohioans. The budget is undergoing further amendments and must be reconciled with the House's version before final approval, with Gov. Mike DeWine expressing cautious skepticism about further tax cuts given funding needs for state services.