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Will Ohio lawmakers tweak local tax laws next legislative session?

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COLUMBUS, Ohio (Statehouse News Bureau) — During this two-year legislative session, Ohio lawmakers have mostly been focusing their tax efforts on statewide—rather than local tax laws—taxes, aside from the numerous property tax proposals they’ve introduced.

The Ohio Chamber of Commerce building from the outside.
The front facade of the Ohio Chamber of Commerce building in downtown Columbus in August 2024. [Sarah Donaldson | Statehouse News Bureau]
A recent study from the Ohio Chamber of Commerce, however, hinted at desire for a renewed focus on legislating local tax laws, which the chamber argues can be cumbersome for businesses to administer.

Rick Carfagna, a Chamber senior lobbyist and GOP former lawmaker, said the varying rates and required paperwork that come with municipal taxes can burden businesses with workers in more than one county.

“We are not looking to abolish municipal income taxes,” Carfagna said in an interview. “We are not looking to tinker with the rates that are currently levied by municipalities or school districts. What we would like to take a fresh look at are, again, the complexities that are involved with business compliance.”

The state hasn’t enacted significant local tax legislation in a decade.

Former Gov. John Kasich signed House Bill 5 in December 2014, although some measures took more than a year to become effective. HB 5 made changes to everything from how taxes are filed to how refunds are issued to administration, collection and enforcement.

Kent Scarrett, Ohio Municipal League executive director, said that last go-around was a net negative for municipalities. He’s wary of what might come but said he thinks that the state is due. Every 10 years or so, Scarrett said, “they (lawmakers) come back and look at it and they make changes, and those changes are not revenue neutral.”

“We certainly have seen from one of the largest business and advocacy groups on Cap Square, the Ohio Chamber of Commerce, continue to pursue their wish list and continue to get more robust in their proposal,” Scarrett said in an interview.

The Chamber’s recent study, the Ohio Tax Benchmarking Analysis, found Ohio’s overall state and local tax burden is in the middle of the pack when it comes to peer states—but Ohio ranks second for “most burdensome” local taxes. Texas came in first.

The full benchmarking analysis can be found here.