Earlier this month, county finance directors breathed a collective sigh of relief as outlets reported the statewide effort to abolish property taxes had not collected enough signatures to make it onto the fall ballot.
Organizers announced they were not going to give up the fight yet, vowing to continue collecting signatures with the goal of putting the initiative on the ballot in November 2027. Ohio will likely continue talking about property tax abolition for the next year and a half, if not longer.
Why do people want to abolish property taxes?
Property taxes have catapulted themselves into the center of the state public policy conversation in Ohio over the past few years, but they have always been something that homeowners have paid attention to. Property taxes are visible. Unlike sales taxes, which are often hidden in prices of goods bought at retail, and income taxes, whose sting is reduced through withholding, homeowners see property tax bills, and feel them when they go up during increases in housing prices. In the past five years, Ohio’s housing prices have grown at the fastest rate on record. Since property taxes are based on assessed housing values, homeowners are feeling these price increases as large, automatic tax increases.
These increases are especially difficult for retirees and other people on fixed incomes like people with long-term disability. Their incomes usually do not rise with the costs of housing, so their discretionary income falls with increases in housing prices. It can also be a challenge for people dealing with low incomes and weak labor markets.
Though property taxes burden homeowners and renters, they have a major benefit: funding public services. Though the connection between public services and taxes can be difficult to see, property taxes are one of the most important tools for financing local government in Ohio.
What do property taxes pay for in Ohio?
A September 2025 memo by the Ohio Legislative Service Commission lays out the uses of property taxes in the state.
The majority of property taxes in Ohio go to school districts. The Ohio Legislative Service Commission estimates property taxes will pay for $15 billion in school district funds in Fiscal Year 2027, which represents nearly two-thirds of all property taxes collected in the state. A few years ago, we conducted a study on school spending which found spending on schools pays off in future labor market earnings for students.
The Ohio Legislative Service Commission projects another $3.8 billion to go to county governments, which provide human services (including administration of safety net programs like SNAP), courts, jails, and public health services.
The remaining $4.6 billion is split between townships, municipalities, and special taxing districts, which finance fire, police, roads, libraries, parks, senior, child, and developmental services, and a range of other public services.
How much money is at stake if property taxes were repealed in Ohio?
All in all, the Ohio Legislative Service Commission estimates local governments will collect over $23 billion in property taxes in Fiscal Year 2027. The Commission estimates that a full repeal would lead to a shift of about $2.6 billion in taxes to fixed-sum levies which would not be covered by the repeal, meaning that the full repeal would amount to a total of $21 billion in property tax repeals.
What could replace property taxes in Ohio?
Property tax repeal would leave a multibillion dollar gap in Ohio’s local government budget. Policymakers will have to find some way to adjust to this policy change if it happens.
One option would be to increase state income or sales taxes. Ohio has been taking steps to decrease its income tax rate over the years, so this would be a reversal of state policy on this front. Ohio increased its sales tax in 2013 as part of a move to shift its taxes from income taxes to sales taxes. Ohio has lower sales taxes than all neighboring states, so it has some room to increase sales taxes without exceeding rates seen nearby.
Another would be to increase local income or sales taxes. The state of Ohio gives pretty wide latitude for local voters to approve new income taxes for municipalities and school districts. Abolition of property taxes across the state would likely lead to a wave of new local income tax levies to replace lost funding. Counties also have some ability to levy sales taxes, but state caps on county sales tax rates would have to be lifted for these to be able to meaningfully replace property taxes.
Lastly, local governments could cut budgets. This strategy is unlikely to close the gap on its own given the tens of billions of dollars that would be lost, mostly from schools, but it would likely be a part of any post-repeal fiscal environment.
Why is replacing property taxes difficult?
While repeal would happen in one fell swoop, replacement would be a piecemeal process. The most viable options for replacing property taxes would come with a required vote at the ballot, which would introduce both delays and uncertainty to the public finance system and would be accompanied with public campaigns before they could be adopted. This would also make things difficult for townships, which have fewer options for authorizing new local taxes than school districts, counties, municipalities, and special districts.
A big question mark for local governments would be whether the state would step in to help fill the budget gap at all. Given that the state has decreased support for local governments over the years and that a statewide anti-tax vote would signal hostility to new taxes, the state would face a lot of headwinds to helping local governments adjust to the new fiscal environment.
How should we evaluate property tax reform in Ohio?
Ultimately, the public and state and local policymakers will have to answer the questions they always should be answering around public policy changes: are they effective, efficient, and equitable?
While property tax reform will reduce tax burdens for some, it will come at the expense of higher taxes in other places, service cuts, or some combination of the two. Local policymakers will need to balance tax increases and benefit cuts adeptly for property tax reform to effectively ease burdens and increase incomes for residents.
Property taxes are not a particularly efficient form of taxation and their repeal could lead to efficiency gains, especially if the state replaced them with land value taxes. On the other hand, deep cuts to education will cripple Ohio’s economy in the long-run.
Property tax repeal could be a huge shift in fiscal equity in Ohio. Likely the largest distributional shift that would come from property tax repeal would be generational. Older Ohio residents who own more property and live in larger houses are likely to benefit at the expense of today and tomorrow’s schoolchildren and current wage and salaried workers.
Property tax reforms may improve Ohio’s tax system. In the short-term, however, full repeal will leave the state, its schools, and local governments with serious fiscal decisions to make.
