There are five bills awaiting Gov. Mike DeWine’s signature.
In a surprise move, before the House-made bills were finalized, the Senate added a provision that has been discussed often and targets rental properties. The approved amendment will increase the 2.5% owner occupancy credit to 15.38% over four years by phasing out the 10% non-business credit that applies to one-, two- and three-family dwellings. Agricultural properties are held harmless. The credits were abolished beginning in 2014 but still apply to levies passed prior to 2013.
The measure will provide property tax relief to homeowners totaling $800 million over four years and $400 million annually going forward.
A statement by the Ohio Real Estate Investors Association condemned the move.
“The Ohio Senate accepted a last-minute amendment to eliminate a critical rental property tax credit in a misguided attempt to target institutional investors and instead knocks the legs out from under thousands of small, independent housing providers,” the statement reads noting institutional investors own less than 3% of all single-family rentals in Ohio.
Lawmakers like Sen. Bill Blessing, a Republican from Hamilton County who co-chaired the joint legislative property tax study committee, have long said that industrial investors — those who buy up residential properties and turn them into rentals — have helped exacerbate the property tax crisis by causing the housing shortage that drove up prices.
Prior to the Senate vote on House Bill 186 — which contains the non-business credit phase-out — Blessing said he doubts rent hikes will ensue because landlords have reaped many tax rewards due to other legislative action. He praised this provision because it applies to every homeowner and doesn’t impact revenues for schools or local governments.
“This is something that I think we can point to as actual tangible, solid property tax relief that is going to be beneficial for every homeowner,” he said. “I have heard some concerns about this with respect to is this going to lead to rent increases. I’m not so sure.”
The main focus of HB 186 was to rein in windfalls in areas where the school districts are at the 20-mill floor. Ohio law says once a school district’s total current expense millage is reduced to 20 mills, it cannot be reduced any further, so tax revenues grow as property values increase. The bill caps increases at the inflation rate and gives a credit to homeowners who were hit with the bloated bills following value adjustments in recent years.
There are 483 school districts at the 20-mill floor — out of roughly 611 statewide — so not everyone will benefit. According to the Legislative Service Commission fiscal report, the tax credits would total $440 million next year, $616 million in 2027 and $642 million the year after that. The credits will appear on second half 2026 tax bills.
The final version of HB 186 also provides a temporary $465 million offset over two years to school districts — keeping revenues steady at 2024 levels — using expanded state sales tax holiday funds.
House Bill 129 also concerns school funding and which levies count toward the 20-mill floor calculation. It is expected to slow annual property tax revenue growth in 211 school districts in the first three years, costing districts $609 million in lost revenue, according to the LSC fiscal analysis.
School officials in Butler County say the state is going after the wrong side of school funding. The superintendents and treasurers at all 10 districts, Butler Tech and the Education Service Center sent a joint letter to their school communities on Friday, asking them to reach out to state lawmakers and demand they “fix the school funding system.”
“Schools are not overspending. They have been cutting costs, sharing services, and doing more with less for years,” the letter reads. “When schools are underfunded, it hurts more than classrooms. It affects jobs, home values, and the strength of our local economy.”
Former Ashtabula County auditor Rep. David Thomas was tapped by Republican leadership to steer tax reform. He authored the bills and responded to the schools’ lament, “look what we have given them since 2020, every year roughly $1 to $2 billion more per year, yet what have they done? Happily taken more and more of the unvoted property taxes.”
Paul Imhoff, director of governmental relations for the Buckeye Association of School Administrators, has given committee testimony on the topic. He told this media outlet the final product is a “fair compromise.”
“There are certainly going to be growing pains for schools as we implement all four of these bills, there’s going to be a lot of work to do and I think we might have to come back on some of these bills and make corrections because I think there could be some unintended consequences,” he said. “But at the end of the day I think it represents a reasonable approach to property tax reform.”
This media outlet asked southwest Ohio county auditors to estimate how much relief local taxpayers would see on their tax bills, but most said estimates would be difficult.
“Everything is so up in the air right now,” Butler County Auditor Nancy Nix said. “I think there will ultimately be a decrease in some tax bills, but it depends on where you are in the valuation process,”
Her office was able to calculate an estimate for the owner-occupancy and non-business credit provision, the savings will be roughly $213 per $100,000. The owner-occupancy credit currently provides a $35 savings per $100,000 and non-business credit $139.
In Montgomery County on average the owner of a $100,000 home will save about $277 annually once the full 15.38% credit is phased in. Under current law the 2.5% credit yields a $45 savings and the expiring credit around $180.
If housing values spike again everyone will benefit from House Bill 335 which limits inside millage increases for all taxing bodies to the inflation rate, producing an estimated revenue loss of $620 million to $763 million over three years.
Butler County officials were the first to sound the alarm ahead of the 2023 triennial update, when it initially appeared values were going to skyrocket 42%. Commissioner Don Dixon and Nix led the charge beseeching state lawmakers to take action.
“I guess we’ve to say kind of thanks to the legislators, but maybe only about a half a thanks,” Dixon said. “Because I really don’t think they went far enough, but it’s a hell of a lot better than it was.”
About the Author