OHIO - As Ohioans ring in the New Year, several major legislative shifts are officially taking effect. Following the passage of the most recent biennial budget and a series of high-impact tax reform bills in late 2025, the "Buckeye State" is entering a new era of fiscal policy. Whether you are an hourly worker, a homeowner, or a high-earning professional, your bottom line is about to change.
Here are the three most significant new laws that will affect your wallet in 2026.
1. The $11.00 Minimum Wage Boost
Effective January 1, 2026, Ohio's lowest-paid workers are receiving a constitutionally mandated raise. Thanks to a 2006 amendment that ties the State minimum wage to inflation (the Consumer Price Index), paychecks are growing to keep pace with the cost of living.
- Non-Tipped Employees: The rate increases from $10.70 to $11.00 per hour.
- Tipped Employees: The base hourly rate increases from $5.35 to $5.50 per hour.
- Small Business Threshold: The higher state minimum wage now applies to any business with annual gross receipts over $405,000 (up from $394,000 in 2025).
For a full-time worker at a large retailer or restaurant, this represents an extra $600+ annually before taxes—a critical cushion as grocery and utility costs remain a primary concern for families.
2. The Shift to a 2.75% Flat Income Tax
In what is being called the most significant tax overhaul in a generation, Ohio has officially adopted a 2.75% flat tax on nearly all non-business income. This transition, which began in 2024, reaches its final stage for the 2026 tax year.
- The Simplified Rate: If you earn over $26,050 in non-business income (such as W-2 wages), your state income tax rate is now capped at 2.75%.
- Middle-Class Savings: This is a substantial drop from the 3.125% top rate seen in 2025. For a family earning $100,000, this shift translates to hundreds of dollars in annual tax savings.
- Filing Clarity: The goal of the flat tax is to make Ohio more competitive with neighboring states and to simplify the filing process for residents.
3. "Stop the Spikes": Billions in Property Tax Relief
Perhaps the most anticipated change for homeowners is the implementation of a massive property tax reform package. After years of skyrocketing home values leading to "surprise" tax hikes, the state has stepped in to create "guardrails."
- The Inflation Cap: These laws now cap the automatic growth of "inside millage" (taxes levied without a vote) at the inflation rate over the previous three years. This effectively stops local governments from receiving a "windfall" simply because home prices spiked.
- The 20-Mill Floor Credit: For residents living in school districts on the "20-mill floor," a new tax credit will help limit total revenue growth to the rate of inflation, preventing the massive 20-30% jumps seen in recent years.
- Direct Homeowner Relief: The state has allocated over $3 billion in relief for the 2026-2027 biennium, specifically aimed at reducing the burden on owner-occupied residential properties.
Bonus: The "Unclaimed Property" Warning
While technically taking effect yesterday (January 1, 2026), a controversial new provision in the budget bill has changed how the state handles unclaimed funds.
- Permanent Escheat: Under the new law, any unclaimed property (forgotten bank accounts, uncashed checks, or insurance payouts) reported to the state before January 1, 2016, is now officially "escheated" to the state to fund stadium and cultural projects.
- Check Now: If you have funds held by the state from the last 10 years, you are now on a rolling 10-year clock to claim them before they are permanently lost.
Navigating Ohio's New Fiscal Landscape
The legal changes taking effect in 2026 represent a significant effort by the state government to balance wage growth with tax relief. While the minimum wage increase provides immediate relief for hourly workers, the broader income and property tax reforms aim to provide long-term stability for homeowners and middle-income families. As Ohio transitions to this flatter, more-capped tax system, the overall goal is to put more money back into residents' pockets. However, citizens need to stay proactive—especially regarding property tax assessments and unclaimed funds—to ensure they are receiving the full benefits of these new laws.
