Ohio’s Flat Tax and Federal Relief Bill Threaten to Deepen Income Gap

Context Ohio replaced its progressive income tax with a uniform 2.75% rate for most earners this year. At the same time, the federal “Big Beautiful Bill” delivers large tax credits to ultra‑wealthy individuals while trimming programs such as SNAP. Researchers at Columbus‑based Scioto Analysis examined how these policies could reshape the state’s income distribution.

Key Facts - Ohio’s Gini coefficient, a measure of income disparity, stands at 46.6, slightly below the national average of 48.6. The World Bank flags any score above 40 as high inequality. - The top 10% of Ohio earners capture 33.7% of total income, while the bottom 50% share just 18.3%. - A family in the bottom 10th percentile earns about $15,500 a year; it would take 15.6 years of work to match the $242,410 earned annually by a family in the top 10th percentile. - The flat tax applies to anyone earning more than $26,050, meaning high‑income households pay the same state rate as middle‑class earners. - Rep. Emilia Sykes (D‑Ohio) criticized the federal bill, saying it offers “billions in tax relief for billionaires while ordinary people struggle to make ends meet.” - The study recommends a negative income tax—payments to low‑income households that phase out as earnings rise—as a countermeasure.

What It Means The combined effect of Ohio’s flat tax and the federal relief package could push more households into the lower‑income bracket, widening the gap between rich and poor. Lower tax rates for high earners reduce state revenue that could fund services for the bottom half, while cuts to federal aid erode safety nets. Researchers argue that without corrective policies, Ohio may see slower homeownership growth, higher housing cost burdens, and weaker retirement savings among low‑income families. The negative income tax proposal offers a potential remedy, but political hurdles remain.

Looking Ahead Watch for legislative debates on Ohio’s tax structure and any federal adjustments to the “Big Beautiful Bill” as advocates push for measures to curb the projected rise in inequality.