{"id":948,"date":"2024-10-15T15:46:32","date_gmt":"2024-10-15T15:46:32","guid":{"rendered":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/?post_type=chapter&p=948"},"modified":"2025-09-16T09:37:38","modified_gmt":"2025-09-16T09:37:38","slug":"8-5-sources-of-revenue-for-the-state-of-ohio","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/chapter\/8-5-sources-of-revenue-for-the-state-of-ohio\/","title":{"rendered":"8.5 Sources of Revenue for the State of Ohio"},"content":{"raw":"
\r\n
\r\n\r\nThe state government of Ohio relies on several key sources of revenue to fund its operations and services. These sources are essential for supporting public programs, infrastructure, and other important functions in the state.\r\n\r\n<\/div>\r\n
\r\n\r\nSales Tax<\/em>\r\n\r\n<\/div>\r\n
\r\n\r\nA major source of revenue for Ohio\u2019s budget is the sales tax, which applies to most goods and some services sold in the state. This tax is important because it grows with the economy, providing a steady stream of income.\r\n\r\n<\/div>\r\n
\r\n\r\nPersonal Income Tax<\/em>\r\n\r\n<\/div>\r\n
\r\n\r\nAnother major source of revenue is the personal income tax. Ohio\u2019s income tax system is progressive, meaning that people with higher incomes pay higher rates on the amounts above certain thresholds.\r\n\r\nFor tax year 2024 (returns filed in 2025), Ohio has three brackets:\r\n
    \r\n \t
  • 0% for income up to $26,050<\/li>\r\n \t
  • 2.75% for income between $26,051 and $100,000<\/li>\r\n \t
  • 3.50% for income over $100,000<\/li>\r\n<\/ul>\r\nRecent legislation is phasing in a change so that by tax year 2026, most non-business income will be taxed flatly at 2.75% for income above $26,050, eliminating the higher 3.50% bracket.\r\n
    \r\n\r\nProgressive vs. Flat Tax<\/strong>\r\n\r\nProgressive Tax<\/strong> - Tax rates increase as income increases. People with higher incomes pay a larger share of their income in taxes compared to those with lower incomes.\r\n\r\nFlat Tax<\/strong> - Everyone pays the same tax rate regardless of income level. Higher earners still pay more in total dollars, but the percentage is the same for all.\r\n\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n
    \r\n\r\nFederal Funds\u00a0<\/em>\r\n\r\n<\/div>\r\n
    \r\n\r\nFederal funds are a significant part of Ohio\u2019s budget. These funds come from the federal government and are used for specific programs like Medicaid, education, and transportation. Federal contributions are crucial because they help supplement the state\u2019s own revenues and support essential public services\u200b\u200b.\r\n\r\n<\/div>\r\n
    \r\n\r\nCheck out this graphic showing revenue sources for the state\u2019s transportation budget. The federal government provided the largest source, followed by the state\u2019s motor vehicle fuel tax. Without this funding source, the state wouldn\u2019t be able to maintain our highways at the same level.\r\n\r\n[caption id=\"attachment_950\" align=\"aligncenter\" width=\"534\"]\"A Figure 2: Revenue Sources for Ohio\u2019s Transportation Budget (Fiscal Year 2023)[\/caption]\r\n\r\n
    \r\n\r\nMotor Vehicle Fuel Tax\u00a0<\/em>\r\n\r\n<\/div>\r\n
    \r\n\r\nOhio\u2019s motor vehicle fuel tax is a crucial revenue source for the state's transportation budget, funding the construction, maintenance, and repair of highways and roads. This tax is applied to the sale of gasoline and diesel fuel, with rates periodically adjusted to meet the growing infrastructure needs. As of July 2019, Ohio increased its fuel tax to 38.5 cents per gallon for gasoline and 47 cents per gallon for diesel. This adjustment was aimed at addressing the funding shortfalls for critical transportation projects across the state, ensuring safe and efficient travel for residents and businesses alike.\r\n\r\n<\/div>\r\n
    \r\n\r\nCommercial Activity Tax (CAT)\u00a0<\/em>\r\n\r\n<\/div>\r\n
    \r\n\r\nThe Commercial Activity Tax (CAT) is a tax on the gross receipts of businesses in Ohio. Unlike a corporate income tax, which is based on profits, the CAT is based on the total receipts of a business. Although it only contributes about 3.5% to the state\u2019s revenues, the CAT is an important part of Ohio\u2019s tax system, especially since Ohio does not have a corporate income tax\u200b.\r\n\r\n<\/div>\r\n<\/div>","rendered":"
    \n
    \n

    The state government of Ohio relies on several key sources of revenue to fund its operations and services. These sources are essential for supporting public programs, infrastructure, and other important functions in the state.<\/p>\n<\/div>\n

    \n

    Sales Tax<\/em><\/p>\n<\/div>\n

    \n

    A major source of revenue for Ohio\u2019s budget is the sales tax, which applies to most goods and some services sold in the state. This tax is important because it grows with the economy, providing a steady stream of income.<\/p>\n<\/div>\n

    \n

    Personal Income Tax<\/em><\/p>\n<\/div>\n

    \n

    Another major source of revenue is the personal income tax. Ohio\u2019s income tax system is progressive, meaning that people with higher incomes pay higher rates on the amounts above certain thresholds.<\/p>\n

    For tax year 2024 (returns filed in 2025), Ohio has three brackets:<\/p>\n

      \n
    • 0% for income up to $26,050<\/li>\n
    • 2.75% for income between $26,051 and $100,000<\/li>\n
    • 3.50% for income over $100,000<\/li>\n<\/ul>\n

      Recent legislation is phasing in a change so that by tax year 2026, most non-business income will be taxed flatly at 2.75% for income above $26,050, eliminating the higher 3.50% bracket.<\/p>\n

      \n

      Progressive vs. Flat Tax<\/strong><\/p>\n

      Progressive Tax<\/strong> – Tax rates increase as income increases. People with higher incomes pay a larger share of their income in taxes compared to those with lower incomes.<\/p>\n

      Flat Tax<\/strong> – Everyone pays the same tax rate regardless of income level. Higher earners still pay more in total dollars, but the percentage is the same for all.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

      \n

      Federal Funds\u00a0<\/em><\/p>\n<\/div>\n

      \n

      Federal funds are a significant part of Ohio\u2019s budget. These funds come from the federal government and are used for specific programs like Medicaid, education, and transportation. Federal contributions are crucial because they help supplement the state\u2019s own revenues and support essential public services\u200b\u200b.<\/p>\n<\/div>\n

      \n

      Check out this graphic showing revenue sources for the state\u2019s transportation budget. The federal government provided the largest source, followed by the state\u2019s motor vehicle fuel tax. Without this funding source, the state wouldn\u2019t be able to maintain our highways at the same level.<\/p>\n

      \"A
      Figure 2: Revenue Sources for Ohio\u2019s Transportation Budget (Fiscal Year 2023)<\/figcaption><\/figure>\n
      \n

      Motor Vehicle Fuel Tax\u00a0<\/em><\/p>\n<\/div>\n

      \n

      Ohio\u2019s motor vehicle fuel tax is a crucial revenue source for the state’s transportation budget, funding the construction, maintenance, and repair of highways and roads. This tax is applied to the sale of gasoline and diesel fuel, with rates periodically adjusted to meet the growing infrastructure needs. As of July 2019, Ohio increased its fuel tax to 38.5 cents per gallon for gasoline and 47 cents per gallon for diesel. This adjustment was aimed at addressing the funding shortfalls for critical transportation projects across the state, ensuring safe and efficient travel for residents and businesses alike.<\/p>\n<\/div>\n

      \n

      Commercial Activity Tax (CAT)\u00a0<\/em><\/p>\n<\/div>\n

      \n

      The Commercial Activity Tax (CAT) is a tax on the gross receipts of businesses in Ohio. Unlike a corporate income tax, which is based on profits, the CAT is based on the total receipts of a business. Although it only contributes about 3.5% to the state\u2019s revenues, the CAT is an important part of Ohio\u2019s tax system, especially since Ohio does not have a corporate income tax\u200b.<\/p>\n<\/div>\n<\/div>\n","protected":false},"author":511,"menu_order":5,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-948","chapter","type-chapter","status-publish","hentry"],"part":48,"_links":{"self":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapters\/948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/wp\/v2\/users\/511"}],"version-history":[{"count":5,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapters\/948\/revisions"}],"predecessor-version":[{"id":2775,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapters\/948\/revisions\/2775"}],"part":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/parts\/48"}],"metadata":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapters\/948\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/wp\/v2\/media?parent=948"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/pressbooks\/v2\/chapter-type?post=948"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/wp\/v2\/contributor?post=948"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ulib.csuohio.edu\/statelocalgov\/wp-json\/wp\/v2\/license?post=948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}