The Buckeye Institute presented testimony before the Ohio House Ways and Means Committee on Wednesday, addressing the proposed Ohio House Bill 503. The bill aims to reform aspects of the state’s municipal income tax system.
Greg R. Lawson, a research fellow at The Buckeye Institute, described Ohio’s current municipal income tax system as “one of, if not the worst local tax structure in the entire nation,” citing issues such as inconsistencies, duplicative taxes for workers, and a lack of transparency.
Lawson acknowledged that while House Bill 503 “will not solve all of these problems,” it introduces reforms intended to protect taxpayers. He explained that the bill would require any changes to “reciprocity credits”—credits given to residents who pay income taxes in another jurisdiction—to be approved by voters. Currently, state law does not mandate these credits, and some municipalities have changed or eliminated them without voter input.
Lawson stated: “House Bill 503 corrects that surreptitious practice and will require any repeal or modification of reciprocal credit agreements be put before the voters—a commonsense reform consistent with the foundational American principle that taxes and tax increases should not be imposed without taxpayer consent.”
He further noted that recent modifications made by municipalities to reciprocity credits after August 1, 2025 but before the bill takes effect would be void unless approved by voters. The legislation also allows citizens to petition for changes regarding reciprocity credits.
“Critically, House Bill 503 does not dictate the credit levels municipalities must offer. It merely requires that changes to those credits be vetted by the voters to safeguard taxpayers,” Lawson said.
The Buckeye Institute is an independent research organization focused on advancing free-market public policy at the state level.
