07/18/2025

Ohio’s New Budget Bill

Here are key tax changes and vetoes to watch

On June 30, 2025, Governor Mike DeWine signed House Bill 96, the state’s biennial budget bill for fiscal years 2026–2027, into law. While the bill includes sweeping tax reforms, it also drew attention for the 67 line-item vetoes, many of which targeted tax provisions. Here’s what individuals and businesses need to know.

Major Tax Changes in HB96

Personal Income Tax

• 2025: The top income tax rate is retroactively reduced (back to Jan. 1, 2025) from 3.5 percent to 3.125 percent for income over $100,000.
• 2026 and beyond: Ohio will implement a flat income tax rate of 2.75 percent, replacing the current tiered system.
• Exemption Limits: Taxpayers with income exceeding $750,000 in 2025 and $500,000 in 2026 and beyond will no longer be eligible for:
  • Personal, spousal and dependent exemptions
  • The joint filing credit

Pass-through Entity (PTE) Tax

Tiered PTEs can now file their own PTET return (Form 4738) to claim credits for taxes paid by lower-tier entities, streamlining credit claims and reducing double taxation.

Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).