The latest proposals to Ohio’s biennial budget bill bring significant changes that could impact your wallet—whether you’re a resident, a small business owner, or both. With a focus on tax reform and economic development, the current proposed budget aims to streamline government operations while offering targeted relief. Here’s a breakdown of the most relevant updates you should know.
For Individual Taxpayers
- Flat Income Tax Rollout
Ohio is proposing a 2.75% flat income tax, simplifying the tax code and potentially lowering tax bills for many residents. If your taxable income is less than $26,050, you’ll continue to pay no state income tax.
This change could be a win for middle- and high-income earners, but it also means strategic planning is more important than ever. If you’re used to tiered brackets, we recommend reviewing your withholdings and estimated payments with us. - Property Tax Relief
The proposed budget expands the Homestead Exemption, offering more relief to seniors and qualifying homeowners, especially those who have paid off their homes but are struggling with rising property taxes. Current proposed metrics show both the exemption and the income threshold for eligibility increasing.
Currently, to be eligible, you must meet criteria related to:
• age (65 or older, or turning 65 in the application year),
• disability (permanently or totally disabled by January 1st of the application year, with documentation)
• surviving spouse status (at least 59 on the deceased spouse’s death date, if they were receiving the exemption)
You must also meet the income guideline set by the Ohio Department of Taxation, which currently is $40,000 based on the previous year’s income for the 2025 application period. However, the income requirement does not apply if you received the exemption before 2014. Additionally, you must own and occupy the property as your primary residence as of January 1 of the application year.
For Business Owners
- Pass-Through Entity (PTE) Tax Updates
Pass-through entities—such as S corporations, partnerships, and many LLCs—face their own set of proposed changes. The budget restores a provision allowing one pass-through entity (PTE) to claim a credit when it owns another PTE that pays Ohio’s electing pass-through entity tax (IT 4738) or files a traditional composite return (IT 4708). This opens the door for more efficient tax planning in layered ownership structures and reduces the likelihood of double taxation.
Final Thoughts
When will all this land on your doorstep? The budget must be finalized by July 1 for the new fiscal year, unless unforeseen complications require a short-term extension. In the meantime, a conference committee is deliberating on the final details, meaning that pieces of the flat tax, property tax relief, and pass-through entity provisions could still be reshaped—or even removed. Once the governor receives a final version, he has the authority to strike out specific parts of the legislation using line-item vetoes.
We are here to help you navigate these changes and optimize your tax position. Please do not hesitate to reach out to your accountant or our office (614-891-5423). As always, it is our goal to make your life #LessTaxing!