Columbus, OH – On Wednesday, The Buckeye Institute testified (see full text below or download a PDF) before the Ohio House Ways and Means Committee on the policies in Ohio House Bill 503, which, if adopted, will improve Ohio’s municipal income tax system.

In his testimony, Greg R. Lawson, a research fellow at The Buckeye Institute, noted that “Ohio’s municipal income tax system remains one of, if not the worst local tax structure in the entire nation,” pointing out that it “suffers from gross inconsistencies, subjects workers to duplicative taxes, and lacks transparent accountability.”

While acknowledging that House Bill 503 “will not solve all of these problems,” Lawson told lawmakers the policies in the bill “offer meaningful reform that will protect taxpayers” by requiring voters to approve any changes to the “reciprocity credits” residents receive when they “pay income taxes in the jurisdiction where they work.” 

Lawson called House Bill 503’s reforms “commonsense” that align with the “foundational American principle that taxes and tax increases should not be imposed without taxpayer consent.”

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Improving Ohio’s Municipal Income Tax

Interested Party Testimony
Ohio House Ways & Means Committee
Ohio House Bill 503

Greg R. Lawson
Research Fellow
The Buckeye Institute
November 19, 2025

As Prepared for Delivery

Chair Roemer, Vice Chair Thomas, Ranking Member Troy, and members of the Committee, thank you for the opportunity to testify regarding Ohio House Bill 503.

My name is Greg R. Lawson. I am the research fellow at The Buckeye Institute, an independent research and educational institution—a think tank—whose mission is to advance free-market public policy in the states.

Ohio’s municipal income tax system remains one of, if not the worst local tax structure in the entire nation. It suffers from gross inconsistencies, subjects workers to duplicative taxes, and lacks transparent accountability. Although House Bill 503 will not solve all of these problems, it does offer meaningful reform that will protect taxpayers from hidden or unilateral changes to municipal income tax reciprocity credits.

Currently, many Ohio municipalities grant “reciprocity credits” to residents when they pay income taxes in the jurisdiction where they work. But state law does not require these credits, and some municipalities have amended or eliminated them without voter review. 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.

House Bill 503 also provides a clear remedy for recent changes that municipalities may have made to reciprocity credits after August 1, 2025, but before the effective date of the bill. Such modifications are void unless voter-approved. This provision will ensure certainty and prevent municipalities from dodging scrutiny via back-door changes. And the bill authorizes Ohio citizens to petition for the creation, change, or repeal of a reciprocity credit, giving residents—and not just local officials—a say in how they are locally taxed.

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.

Thank you for your time, and I look forward to answering any questions that members of the Committee may have.

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