Tax expenditures shortchange Ohioans

Ineffective tax breaks warrant strict review

Unproductive tax breaks that favor corporations and wealthy Ohioans have riddled the state tax code for years. In a new report released today, Policy Matters Ohio outlines the scope of these tax expenditures, as they are known, and recent changes that hold out some hope for change.

“As of early this year, the state had 177 tax exemptions, credits, or deductions worth more than $12 billion a year, which would amount to more than a quarter of the revenue the state collects,” noted report co-author Zach Schiller. “Spending through the tax code too often benefits select groups and special interests instead of funding education and public services that are available to everyone, or funding targeted property-tax relief.”

House Bill 96, the budget bill recently approved by the General Assembly, limited or repealed nine tax breaks worth $325.5 million during Fiscal Years 2026 and 2027. “This illustrates that progress is possible,” Schiller said.

“However, the budget bill also will boost the cost of other tax breaks, and the final version walked back even better changes proposed earlier in the legislative process, underscoring the need for a permanent, public mechanism for reviewing all the state’s tax breaks,” he noted. “While some modest steps were taken in the recent budget, Ohio has a long way to go.”

The new report details Ohio’s largest and fastest-growing tax breaks. It finds that nearly two-thirds of the revenue the state expects to forgo from them over the next two years will go to business and economic development. “Some targeted tax expenditures help everyday Ohioans,” Schiller said. “But far too many only help private companies without significant safeguards. Legislators should scrutinize these expenditures to determine whether they provide any benefit to the state.”