A proposal to abolish property taxes in the state of Ohio could prompt a surge in other forms of taxation to offset the lost revenue if voters approve the measure, the state’s governor warned.
Gov. Mike DeWine, a Republican, spoke at a conference earlier this month and said that if the proposed constitutional amendment to ban property taxes reaches the ballot and is approved by voters, the state government may be forced to raise sales taxes to compensate for the impact on the state budget.
The property tax initiative is in the signature-gathering phase, which will require certification before it’s officially on this fall’s ballot, and advocates view abolishing property taxes as a way of helping homeowners.
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“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.”
DeWine added that Ohio lawmakers may also have to consider hiking other taxes, such as the state’s income taxes, to plug the roughly $24 billion budget hole that would result with the elimination of property taxes.
The state of Ohio’s Office of Management and Budget authored a memo earlier this month that analyzed the proposed constitutional amendment to eliminate and ban property taxes, which 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 about three-fifths of property tax revenue goes to supporting local school districts. If property taxes were eliminated, it could cause thousands of layoffs among school staffers, prompting larger class sizes and school closures along with program cuts.
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Police, fire and EMS services 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, the memo explained.
Libraries, parks, health and human services and support services for seniors would also face cuts or elimination that could affect the community’s quality of life. In particular, 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 through a homestead exemption for seniors and residents with disabilities, as well as a tax credit for residential homeowners.
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It 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 the state to replace property taxes.
Ohio has a flat state income tax of 2.75% in the current tax year, which is the second-lowest rate of any state in the country. The personal income tax generated $10.5 billion in revenue during fiscal year 2025.
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, though it would entail broadening the sales tax to apply to currently exempt items including food and healthcare, among other goods and services. Those 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 for combined state and local sales tax rates. The sales tax generated $14 billion in fiscal year 2025.
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