Ohio could face a funding dilemma because of a proposal to abolish property taxes in the state that could prompt a surge in other forms of taxation to offset the lost revenue should voters approve the measure, Ohio Gov. Mike DeWine warned.
DeWine, a Republican, spoke earlier this month at a conference and said that if the proposed constitutional amendment to ban property taxes reaches the ballot and is approved by voters, the state government might be forced to raise sales taxes to compensate for its impact on the state budget.
According to Fox Business, the property tax initiative is in the signature-gathering phase, which will need certification before it’s officially on this fall’s ballot. Advocates have said they view abolishing property taxes as a way of helping homeowners.
“Sales tax could go up to 17, 18, 19, 20%, sales tax in the state of Ohio on products that you buy,” DeWine said, according to a report by Cleveland.com. “So, it would be absolutely devastating.”
Other Taxes Could Increase
DeWine said that Ohio lawmakers may have to consider increasing other taxes, such as the state’s income taxes, to stanch the roughly $24 billion budget hole that would result from the elimination of property taxes.
Fox Business said that the state’s Office of Management and Budget authored a memo earlier this month that analyzed the proposed constitutional amendment to eliminate and ban property taxes. It noted that the $24 billion in annual property tax receipts is “equal to the total revenue from Ohio’s state income and sales taxes combined.”
“Eliminating property taxes would immediately destabilize local budgets and force deep cuts to essential services, reducing or eliminating funding for local law enforcement, first responders, and schools, delaying road and infrastructure repairs, and threatening services for seniors and people with disabilities,” the memo said.
Ohio’s budget office noted that roughly three-fifths of property tax revenue goes to supporting local school districts. Should property taxes be eliminated, it could cause thousands of layoffs among school staffers, prompting larger class sizes and school closures, along with program cuts.
According to the memo, police, fire, and EMS services also are all heavily reliant on property tax revenues, and eliminating those funding streams could cause station closures – particularly in smaller communities – as well as reducing staffing and slower response times.
Libraries, parks, health and human services, and support services for seniors also would face cuts or elimination that could affect the community’s quality of life, the memo said. In particular, it said that programs related to seniors, health, recovery, and developmental disabilities losing funding could increase the strain on hospitals and state systems.
The Ohio budget office’s memo noted that the state already offers some property tax relief via a homestead exemption for seniors and residents with disabilities, as well as a tax credit for residential homeowners.
The memo also discussed the issues with replacing the $24 billion in property tax revenue, noting that the nonpartisan Tax Foundation assessed that income tax rates would need to quadruple or more to 11% to 15% across Ohio to replace property taxes.
Currently, Ohio Has a Flat Income Tax of 2.75%
Ohio has a flat state income tax of 2.75% this current tax year, which is the second-lowest rate of any state in the country, Fox Business said. The personal income tax generated $10.5 billion in revenue during fiscal year 2025.
According to Fox Business, the budget office consulted with the Ohio Department of Taxation on replacing property taxes with state sales tax revenue and estimated it would require sales tax rates approaching 15% to 18%, a level that would be significantly higher than other states.
A lower sales tax rate could cover the lost property tax revenue, but it would entail broadening the sales tax to apply to currently exempt items, including food and healthcare, among other goods and services.
Those sales tax changes would require legislative and, in some cases, constitutional changes, the budget office found.
Ohio has a 5.75% sales tax, which ranks near the middle nationally in terms of combined state and local sales tax rates. Fox Business reported that the sales tax generated $14 billion in fiscal year 2025.
