Ohio House Bill 1, passed by the 135th General Assembly, reshapes both state income tax and residential property tax. It consolidates the income tax into a single 2.75% rate by tax year 2026, cuts the property assessment rate from 35% to 31.5%, phases out the 2.5% owner-occupied rollback credit over three years, and expands the homestead exemption with annual inflation adjustments. The income tax changes phase in from 2024 through 2026, and the property tax provisions roll out through 2026 and beyond.
What Happens to Your State Income Tax
Before HB 1, Ohio ran a graduated income tax with several brackets. The law collapses that structure in stages. For tax year 2024, two brackets apply: 2.75% on income between $26,050 and $100,000, and 3.5% on income above $100,000. For 2025, the top rate falls to 3.125%.1Ohio Legislative Service Commission. Ohio Revised Code 5747.02 – Tax Rates
Starting in tax year 2026, the upper bracket is gone. Every dollar of taxable income above $26,050 is taxed at a flat 2.75%, with a base amount of $332 added to the calculation. If your modified adjusted gross income is $26,050 or less, you owe no Ohio income tax.1Ohio Legislative Service Commission. Ohio Revised Code 5747.02 – Tax Rates
Put concretely: an Ohio resident earning $80,000 in 2026 would owe $332 plus 2.75% of $53,950 (the amount over $26,050), for a total of roughly $1,816. Someone earning $150,000 would owe $332 plus 2.75% of $123,950, or about $3,741.
The Lower Property Assessment Rate
Ohio has long assessed real property at 35% of its true market value, so a home worth $200,000 carried an assessed value of $70,000 for tax purposes. HB 1 lowered that assessment rate to 31.5% starting in tax year 2024 and ties it to inflation going forward.2The Ohio Legislature. House Bill 1 – 135th General Assembly
At 31.5%, that same $200,000 home now has an assessed value of $63,000, trimming $7,000 off the taxable base. The inflation indexing means the rate can keep adjusting in future years, which may blunt some of the impact when rising market values push assessed values up during reappraisal. County auditors apply the reduced rate when they set taxable value for every residential and commercial parcel in the county.3Ohio Legislative Service Commission. Ohio Revised Code 5713.03 – County Auditor to Determine Taxable Value of Real Property
Phase-Out of the 2.5% Owner-Occupied Rollback
Ohio homeowners have for decades received an automatic 2.5% reduction on their property tax bills for their primary residence. The county auditor applied the credit at billing, and the state reimbursed local governments. HB 1 phases this credit out for residential property over three years instead of ending it all at once.
Under the amended Ohio Revised Code 319.302, the rollback for residential property drops to 7.5% in the first applicable tax year, then falls by another 2.5 percentage points in each of the next two years, reaching zero in the fourth year and after.4Ohio Legislative Service Commission. Ohio Revised Code 319.302 – Reduction of Remaining Taxes
The practical effect is a gradual rise in what you actually owe, because a credit that had been shaving money off your bill is disappearing. Whether the lower assessment rate offsets that for you depends on your property’s value and your local millage.
A Bigger, Inflation-Indexed Homestead Exemption
HB 1 raised the homestead exemption and tied both the exemption amount and the income limit to inflation. Previously, those figures were fixed and lost value over time.
The exemption is open to Ohio homeowners who are 65 or older, permanently and totally disabled, or a surviving spouse of someone who qualified. Disabled veterans and surviving spouses of public service officers killed in the line of duty get a larger exemption.5Ohio Legislative Service Commission. Ohio Revised Code 323.152 – Reductions in Taxable Value
For tax year 2025 (real property) and tax year 2026 (manufactured homes), the reductions are:
- $29,000 off assessed value for seniors and disabled homeowners
- $58,000 off assessed value for disabled veterans and surviving spouses of public service officers
Both figures are now adjusted each year using the GDP deflator.6Ohio Department of Taxation. Real Property Tax – Homestead Means Testing
The income limit moves too. For tax year 2026, total household income cannot exceed $41,000, measured against your 2025 tax return. The tax commissioner recalculates the ceiling each September using the same formula, rounding to the nearest $100.5Ohio Legislative Service Commission. Ohio Revised Code 323.152 – Reductions in Taxable Value
How to Apply for the Homestead Exemption
Eligible homeowners file DTE Form 105A with the county auditor where the property sits. The form asks for your name, Social Security number, the parcel number of your primary residence, and income information for the qualifying year. You can pick one up at the auditor’s office or download it from the Ohio Department of Taxation.7Ohio Department of Taxation. Homestead Exemption Application for Senior Citizens, Disabled Persons and Surviving Spouses
If you are applying on a disability basis, include a certificate from a licensed physician or psychologist confirming a permanent and total disability, or documentation from a state or federal agency that has certified it.8Ohio Legislative Service Commission. Ohio Revised Code 323.153 – Application for Reduction in Real Property Taxes Disabled veterans need a letter from the U.S. Department of Veterans Affairs.
The deadline for real property is December 31 of the tax year you want the exemption for. For manufactured or mobile homes, file by December 31 of the year before the tax year in question.7Ohio Department of Taxation. Homestead Exemption Application for Senior Citizens, Disabled Persons and Surviving Spouses Missing the deadline isn’t permanent: the form has a checkbox for late applications covering a prior year, though you forfeit the exemption for the year you missed.