Would you pay more or less under Ohio House Republican tax plan? Here's how to calculate it

Cutting income taxes is one of the big goals for Ohio House Republicans this year, but the way they've written their bill to do so could end up raising the overall tax burden of most Ohioans.

House Bill 1 would flatten Ohio's income tax down to a single rate. Everyone would pay nothing on the first $26,050 they earn and 2.75% on everything above that amount.

"For the average homeowner in Ohio, who has the average income, it would be very fair to say that if the bill is passed as written, the income tax cut will be eclipsed by the property tax increase," said Paul Imhoff, the director of governmental affairs for the Ohio Superintendent Association.

The bill would lower state revenues by about $1.7 billion per year, and local officials say the corresponding offset (or cut to state spending) would actually raise local property taxes.

"The intent of the bill is to keep property taxes the same and provide an income tax cut for everyone," the sponsor of the bill Rep. Adam Mathews, R-Lebanon, said. "Until that is the reality, we’re going to keep working on it."

But as it stands now, that might not be the case for the majority of Ohioans.

The math for figuring out whether your overall tax burden would increase is complicated, and it depends on where you live. But here are steps that can help you figure it out.

Income tax cut

This is the easiest thing to calculate. To figure out how much you would save by flattening the tax rates, you need your total taxable nonbusiness income.

That's the amount on Ohio IT40 line 7 of your tax form. It's basically your total income minus any credits or nontaxable earnings like 401K contributions, healthcare savings accounts or college plans for your children. It also exempts the first $25,000 you earn because Ohio doesn't assess income taxes until you surpass that amount.

Here are some incomes and their annual reductions under HB 1:

• $75,000 in taxable income = $140 in savings.
• $100,000 in taxable income = $296 in savings.
• $150,000 in taxable income = $870 in savings.
• $200,000 in taxable income = $1,490 in savings.
• $300,000 in taxable income = $2,730 in savings.

Property tax increase

This is where HB 1 gets complicated. The bill proposes eliminating two different subsidies that Ohio pays toward your local property taxes, which cost about $1.3 billion annually, to cover the cost of the income tax cuts.

Imagine your property tax bill is $100. Currently, Ohio covers $10 through a nonbusiness property rollback and another $2.50 in a homestead rollback for living in the house you own. You pay the other $87.50.

HB 1 would eliminate the 10% rollback and convert the 2.5% rollback to a flat fee of $125. For homes valued around $300,000 or higher, the homestead change would result in a modest tax increase.

But eliminating that 10% rollback could be a significant increase in your property taxes.

To counter that, Mathews dropped the maximum taxable value of a home by 10%.

"I think the bill’s author thought, OK, fine. We’re going not going to make the local homeowner pay more," Olentangy School District Treasurer Ryan Jenkins said. "And most people are going to say sounds fair."

That aligns with what Mathews told the USA TODAY Network Ohio Bureau when the bill dropped.

He said there would be some "transitional dollars" to help local schools, firefighters and libraries adjust to the cuts. But if they want to keep those funding levels long-term, these entities would need to pass new levies.

"Putting those dollars into a more accountable form of government for our taxpayers and our communities," Mathews said. "I think that's a win for everyone.

Jenkins saw three potential issues with that. The first was that districts, especially suburban ones, would become "far more reliant on property taxes," − something the state has tried to move away from since 1997 when the Ohio Supreme Court ruled an overreliance on local dollars to be unconstitutional.

The second issue was the equalization factor, which will determine whether HB 1 increases or decreases your overall tax burden.

The equalization factor was passed in the 1970s and protects homeowners from paying more just because their property values increased. Basically, levy millage drops when values rise, so the taxing entity (your school district) receives a consistent amount of money each year.

They don't make more when times are good, but they also don't lose a bunch when times are bad. And this is where HB 1 comes into play.

Jenkins, Imhoff and others believe the equalization factor would apply here, and local levies throughout Ohio would automatically increase to keep their total collections equal to previous years.

For Olentangy parents, that automatic increase could easily eclipse what they save from the income tax cut, Jenkins said.

If a family has $100,000 in taxable income and an assessed home value of $400,000 (the median for the district), they would save $295 in income taxes but pay $512 more in school property taxes.

They could also see additional automatic increases for their parks, police, fire or library levies.

Homeowners with a home value of $300,000 would see an increase of $366, and those with values of $500,000 would see an increase of $660, according to data provided by Olentangy, a suburban district near Columbus.

The third potential pitfall was how much harder it might be to pass future levies if voters thought their local schools got some kind of windfall from this property tax increase.

"Olentangy would not be increasing anyone's property taxes, nor would they be receiving more money," Imhoff said. "But I think explaining that to the taxpayers is going to be incredibly difficult ... Property tax owners, even if they understand that, have a limit to how much they can afford."

And people on fixed incomes might not be able to afford their homes.

"I think it’s pretty clear from the last two weeks of testimony that HB 1 and its implications were not really thought through before it was introduced ...," Rep. Dani Isaacsohn, D-Cincinnati, said. "I would be surprised if Republicans were willing to pass a bill that was a dramatic increase in property taxes for all property owners."

Mathews plans to keep working on ways to keep people's property taxes from rising. He suggested using some of the dollars left over from the last budget or tweaking other parts of the tax code. He said he's not giving up on HB 1

But Rep. Rodney Creech, R-West Alexandria, said, "There need to be some major changes before I support it."

Anna Staver is a reporter 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.