Ohio’s sweeping property tax reform package became law Friday, March 18, delivering over $3 billion in estimated savings through five bills that cap tax increases tied to rising home values and shift more relief toward homeowners. Governor Mike DeWine signed the legislation in December 2025 after more than a year of Statehouse deliberations, marking what lawmakers call the most transformative property tax changes in at least half a century.

The reforms address widespread complaints about skyrocketing property tax bills amid real estate booms, particularly in districts at the state’s 20-mill floor. But the savings won’t hit all homeowners equally, and local officials warn the changes could strain school budgets and force service cuts.

House Bill 186 forms the centerpiece of the package, capping school tax increases at inflation rates for districts at the 20-mill floor. The 20-mill floor represents the minimum amount school districts must collect to qualify for state funding, measured as $1 for every $1,000 of home value. When districts operate at this floor, they previously lost protections that normally prevent tax bills from spiking after property reappraisals.

The bill is projected to save taxpayers about $1.7 billion over the next three years. Some homeowners saw immediate relief when the state recalculated recent tax increases retroactively as if the cap had already been in place. The Legislative Services Commission estimated these retroactive adjustments averaged $126 per homeowner in affected areas.

But not all Ohio homeowners will benefit. A majority of districts sit on the 20-mill floor, but most urban and suburban districts do not. Homeowners in Cleveland, Columbus, Cincinnati and other major metro areas won’t see savings from this specific provision.

The same bill also restructures tax credits for owner-occupied homes. Ohio currently provides homeowners a 2.5 percent owner-occupancy credit and a 10 percent non-business credit on their tax bills. The new law combines these into a single owner-occupancy credit that will phase up to approximately 15 percent by 2029, delivering an estimated $800 million in additional savings over four years.

To fund the enhanced homeowner credit, the state eliminated the 10 percent non-business credit for rental and commercial properties. Farm properties remain eligible. Rental property owners have warned the change could push rents higher as landlords lose the tax break.

House Bill 335 caps the growth of inside millage, the portion of property taxes local governments can collect without voter approval. Unlike voter-approved levies, inside millage doesn’t decrease when home values rise. If property values jump 30 percent, inside millage collections automatically increase 30 percent.

The new law ties inside millage growth to inflation rates based on a three-year GDP deflator. The Legislative Services Commission projects this will slow revenue growth by $120 million to $135 million in 2026, $195 million to $250 million in 2027, and $305 million to $378 million in 2028. The total impact ranges from $621 million to $763 million over three years.

For homeowners, the impact varies by location. Areas experiencing rapid property value appreciation will see the most savings from capping inside millage growth.

House Bill 129 changes how Ohio calculates the 20-mill floor beginning with tax year 2026, which affects calendar year 2027 tax bills. The law added more types of levies to the floor calculation, including fixed-sum levies that previously didn’t count toward the 20-mill minimum.

This technical change prevents an estimated $609 million in tax increases over three years. The provision doesn’t deliver immediate savings but prevents future tax spikes as districts approach the floor threshold.

House Bill 124 reforms the property reappraisal process by requiring county auditors to use county-provided sales data rather than relying solely on their own valuations. The bill also enables property owners to appeal valuations to the Board of Tax Appeals and Ohio Supreme Court. These procedural changes took effect March 18 alongside the other reforms.

Representative Monica Robb Blasdel, a New Waterford Republican who sponsored key provisions, called the package “the most transformative property tax reforms Ohio has seen in at least a half a century.” She described the approach as “responsible” while “protecting homeowners while ensuring schools and local services remain supported.”

Senator Sandra O’Brien, chair of the Local Government Committee, said the measures “are a chance to show Ohio taxpayers that we hear their pleas for property tax relief.” She cautioned against ballot initiatives to eliminate property taxes entirely, warning such moves “would place Ohio at the edge of the abyss.”

School districts and local governments have raised concerns about the fiscal impact. Officials warn of “serious cash flow issues” that could lead to teacher layoffs and service cuts. The Ohio Municipal League and firefighter associations warned that inside millage restrictions risk “budget shortfalls, layoffs, and deferred maintenance.”

Property taxes generate approximately $24 billion annually for Ohio’s local governments, making them a critical revenue source for schools, municipalities, and counties. The reforms don’t reduce existing tax bases but slow the rate at which collections can grow.

School districts affected by the caps may need to pursue fixed-sum levy renewals, which the reforms limit to five-year terms, or request county budget commissions to match prior-year revenue levels. Some districts have already begun planning for potential shortfalls in 2027 when multiple provisions take full effect.

Ohio’s reforms align with a broader wave of state-level property tax changes in 2026. Indiana enacted $1.2 billion in homeowner relief through $300 annual credits and local income tax caps, though the changes cost local governments $1.5 billion. Florida Governor Ron DeSantis proposed $300 million in offsets for homestead cuts and is pursuing a 2026 ballot amendment to eliminate property taxes entirely.

These efforts respond to voter frustration with rising tax bills amid surging home values. Ohio’s approach of capping revenue growth and reconfiguring school taxes mirrors restrictions adopted in multiple states, though critics note the trade-offs in reduced local fiscal flexibility.

For homeowners trying to estimate their savings, county auditor websites and tax bills show current owner-occupancy and non-business credits. Adding approximately 20 percent to the combined total provides a rough estimate of the enhanced credit’s value once fully phased in by 2029.

The retroactive $126 average savings from House Bill 186 applies primarily to homeowners in rural districts at the 20-mill floor. Urban and suburban residents won’t see this specific benefit but may gain from inside millage caps if they live in areas with rapid property value growth.

Commercial property owners at the Class II mill floors also benefit from the inflation-based credits. Fast-appreciating commercial properties gain from inside millage caps that slow non-voted tax growth.

Renters may see indirect effects as landlords adjust to losing the non-business credit. Multi-family condominiums also lose the credit under the phase-out, though the timeline extends through 2027 to 2029.

The reforms don’t guarantee lower tax bills for all Ohioans. Instead, they limit how fast bills can rise as property values increase. Homeowners in stable-value areas or districts not at the mill floors may see minimal impact.

Most provisions became effective March 18, with impacts appearing on summer 2026 tax bills that cover the second half of the tax year. The enhanced owner-occupancy credit phases in gradually through 2029, while the 20-mill floor calculation changes affect 2027 calendar year bills.

Source: Ohio’s $3 billion property tax overhaul starts Friday. What it means for your bill | Cleveland.com