For the first time in more than 50 years, Ohio’s superlawyers, brain surgeons and CEOs could pay the same tax rate as its servers, clerks, and most other, more modest earners. 

Republican lawmakers passed the state budget Wednesday along party lines. Among a sweep of other changes, the legislation reduces Ohio’s top marginal income tax rate – paid by the 1 in 5 Ohioans who earn more than $100,000 per year – from 3.5% to 2.75%. 

That’s the same rate that lower earners already pay, meaning Ohio for the first time since it established an income tax in 1972 would have a “flat” tax system where everyone pays the same rate. For the past five decades, Ohio, like most states, has used a “progressive” system where bigger earners paid higher rates. 

Achieving a flat tax rate has been a long sought goal of Republicans, second only perhaps to an outright end to income tax collections, a long-festering idea among the party. 

State budget analysts estimate this year’s budget change would mean Ohio will lose more than $1.1 billion in revenue per year when it’s fully phased in. Gov. Mike DeWine has 10 days to sign or veto the provision. 

Republicans say lower income tax rates spur economic growth by enticing wealthy people and businesses to move here. Senate Finance Chairman Jerry Cirino on Wednesday described the changes as creating a “simplified” flat tax that’s “putting dollars back into the hands of taxpayers.”

Democrats frame the cuts as a giveaway to the wealthy, emphasizing that a worker needs to make nearly twice Ohio’s median wage to feel the effects of the cut. 

“There’s not a single millionaire in Ohio that needs a $10,000 tax cut,” said Euclid Democratic Sen. Kent Smith. “The flat tax budget is more like a ‘more for me’ budget, the ‘me’ being those who are already living in comfort.”

Lowest top tax rate in history

When Ohio first levied its income tax, it broke earners into six tiers. The top tier – those earning $40,000 or more – paid $900 plus 3.5% of all income in excess of $40,000. 

By the early 1980s, a mix of economic headwinds including an international oil crisis, economic stagflation, and the savings and loan crisis led to lawmakers imposing steep tax hikes. The bracket system grew to eight tiers, and top earners paid $5,890 plus about 9.2% of all earnings over $100,000. 

But from 1984 onward, Ohio tapered that rate downward, bit by bit over decades. Perhaps Gov. John Kasich, a Republican who helped continue the trend, put it best. 

“We’ll march over time to destroy the income tax that has sucked vitality out of this state,” he said in 2010. 

Along with reducing rates, lawmakers have collapsed the tax brackets. At its height, workers fit into one of 9 tax brackets, each including a higher rate for a higher earning window. In the last state budget in 2023, along with cutting top marginal income tax rates, lawmakers reduced the number of tiers from four to two. 

Ohio vs. the world

As of 2025, 15 states use a “flat” tax system, according to the Tax Foundation. Eight states collect no income tax, and the rest use a progressive system. 

Ohio’s top rate proposed in the budget would be lower than all nearby states. Michigan’s is 4.25%; Indian’s is 3%; Kentucky’s is 4%; West Virginia’s is 4.8%; and Pennsylvania’s is about 3%. 

A surgeon and the engineer will get a tax cut 

Imagine three Ohio workers who earn what the Bureau of Labor Statistics estimates as the average salary for their professions: an orthopedic surgeon making $455,000 per year; an engineer making $120,000 per year; a construction worker making $61,000 per year; and a server making $30,000. 

Using 1972’s tax rates, the surgeon would pay $15,425 in taxes; the engineer would pay $3,700; the construction worker would pay $1,635; and the server would pay $600.

When Ohio taxed income at its highest rates of 1984, everyone’s tax bill went up, but the bigger burdens fell on the bigger breadwinners. The surgeon paid about $38,200; the engineer paid about $7,500; the construction worker paid about $3,000; and the server paid about $1,100. 

Fast forward to next year when the new rates would take effect. The surgeon would owe about $12,100 in taxes; the engineer would owe about $2,900; the construction worker would owe $1,290; the server owes $440. 

Compared to today’s rates, the surgeon and the engineer get a tax cut, while things stay the same for the construction worker and the server. 

Over a longer period of time, everyone’s tax bill decreased, but most of those savings went to the doctors and engineers of the world over the servers and construction workers. 

Biggest benefits go to the wealthy 

Policy Matters Ohio, a progressive think tank that has steadily opposed income tax reductions over the years, refer to this year’s cut as a “handout to the wealthy at the expense of everyday Ohioans” making less than six figures. 

By their analysis, Ohioans with an income of at least $138,000 per year will reap over 96% of the $1.1 billion in annual tax cuts. The top 1% of Ohio’s earners, who make more than $1.8 million per year, will get 40% of the benefit via $6,500 per year in savings. 

In contrast, the Buckeye Institute, a conservative think tank and de facto counterpart of Policy Matters, has claimed that a flat personal income tax rate would drive gains in Ohio’s economic output, jobs, and capital investments.