Gov. DeWine skeptical of Ohio lowering income taxes again

Haley BeMiller

State Bureau

USA TODAY NETWORK

Gov. Mike DeWine is wary of cutting Ohioans’ income taxes in the next budget, saying the state only has so much money to pay for schools and other key services.

DeWine unveiled his proposal for the 2026-2027 budget last week, and lawmakers will spend the next few months hashing out a final plan. That could include another reduction in the state income tax, according to Senate President Rob McColley − provided Ohio can afford to lose more revenue.

'This is just a natural progression of the tax changes we’ve made over the past decade plus, where we continue to eliminate brackets with the hope of eventually getting down to a flat tax,' McColley, R-Napoleon, told reporters last month. 'If we can do it, there’s a strong desire to do it.'

Ohio has two tax brackets: People earning up to $100,000 pay 2.75%, and those who make more are taxed at 3.5%. Ohioans earning less than $26,050 annually don’t pay state income taxes. Republicans in the House and Senate want to gradually reduce the tax rate to 2.75% across the board.

DeWine said Wednesday that Ohio made itself attractive to businesses like Intel and Anduril, which greenlit major developments in the Buckeye State. Taxes aren’t the problem, in the governor’s view: It’s ensuring these companies have enough skilled workers.

At the same time, DeWine acknowledged that the budget process is a negotiation. 'We’re highly competitive in the area of taxation,' he said in an interview with the statehouse bureau. 'So we have to stay focused on what is important, and that is our people and being able to invest in our people.'

DeWine defends proposed tax hikes on sports betting, pot

But DeWine is eager to tinker with taxes in other areas of the budget.

The governor wants to double the sports gaming tax to help pay for stadium projects, such as upgrades to the Cincinnati Bengals’ Paycor Stadium and a new stadium for the Cleveland Browns. He believes the state should invest in major league sports but said new stadiums can’t come at the expense of education. Without a new funding source, he argued, local governments may need to shoulder more of the cost.

'This gives us an opportunity to tax the gaming interests, the people who are making a lot of money,' DeWine said. 'It’s not going to slow down gambling in the state. When we doubled the tax last time, it didn’t slow it down.'

Sports betting isn’t the only so-called sin tax that DeWine hopes to leverage.

His budget proposal calls for increasing the tax rate on recreational marijuana from 10% to 20%. Ohioans voted to legalize recreational marijuana in 2023 − and approved the 10% tax rate − but lawmakers can make changes to the voter-backed statute. Senate Republicans introduced a bill that would tax products at 15%.

Under DeWine’s plan, adult-use cannabis revenue would go to jail construction, police training, the 988 suicide lifeline and a new expungement program, among other services. His proposal also scraps a fund for local governments that host dispensaries, a source of frustration for local officials who budgeted with marijuana money in mind.

DeWine said he and the Legislature have a 'fiduciary obligation' to spend money wisely − and he contends most Ohioans who voted for recreational marijuana won’t care how their tax dollars are used.

'I firmly believe that the majority of people did not vote for it because of how that money was going to be spent,' DeWine said. 'They voted for it or voted against it basically just on the issue of, should we legalize marijuana in the state of Ohio?'

Haley BeMiller covers state government and politics for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.