Ohio has reached a pivotal moment in its economic trajectory, marked by sweeping tax reforms and expanded educational options that are reshaping its competitiveness. In a significant policy shift, the state adopted a flat personal income tax structure, joining eight other states that have moved away from progressive taxation since 2021. This change reflects a broader philosophy: economic vitality stems from empowering individuals and businesses to retain and reinvest their earnings. n nFor decades, Ohio faced persistent population loss and declining influence. Between 1981 and 2022, the state experienced net out-migration every year, resulting in the loss of nine congressional seats since 1980—the highest among all states except New York and Pennsylvania. Its economic outlook was once ranked 47th out of 50 states in the 2007 Rich States, Poor States index, a reflection of high taxes, excessive regulation, and limited economic freedom. n nIn contrast, neighboring Indiana pursued consistent reforms—reducing taxes, controlling expenditures, and adopting right-to-work policies—leading to a current national ranking of third in economic outlook. Ohio has now followed a similar path. Since 2005, the state’s top income tax rate has been slashed from 7.2% to 3.1%, with a 2.75% flat rate set to take effect in 2026—lower than Indiana’s and among the most competitive in states that still levy an income tax. n nThe results are measurable. In 2023, Ohio recorded its first net population gain since 1981. Its standing in the Rich States, Poor States index has improved to 25th, signaling a turnaround in economic attractiveness. While some local income taxes continue to limit the full impact of state-level reforms, the trend is clear: states with lighter tax burdens are gaining residents and investment. Nine states have no personal income tax, and others, including Kentucky and Oklahoma, are moving toward elimination. n nBeyond taxation, Ohio is transforming its education landscape through the expansion of school choice. The EdChoice program now offers families greater flexibility in selecting high-quality educational options, enabling them to direct resources toward schools that best meet their children’s needs. This dual focus—on fiscal responsibility and human capital development—creates a powerful synergy. n nLower tax rates reduce disincentives to work and invest, while expanded educational opportunities enhance long-term mobility and workforce readiness. Together, these policies make Ohio more appealing to skilled professionals, entrepreneurs, and growing families. n n”The comeback is underway,” noted policy analysts. “What we’re seeing is not luck, but the outcome of deliberate, principled reforms.” With improved policy predictability and growing momentum, Ohio is positioning itself as a destination for innovation and opportunity. Though challenges remain, the state’s transformation demonstrates how strategic leadership can reverse long-standing economic decline. n
— News Original —nA Turning Point for Ohio’s Economy: Jonathan Williams on American Radio Journal – American Legislative Exchange CouncilnEarlier this year, Ohio joined the growing number of states that have adopted a flat tax on personal income — a quiet revolution in tax policy that is reshaping the economic landscape of the nation. Since 2021, eight states have moved away from progressive income taxes toward flat-rate systems. n nThis shift reflects a simple but powerful idea: prosperity is created by those who work, invest, and produce — not by those who redistribute. n nFor Ohio, this marks an important moment. Once an industrial powerhouse, the state had suffered for decades from losing population, businesses, and influence. Since 1980, Ohio has lost nine congressional seats due to population declines — more than any state except New York and Pennsylvania. Between 1981 and 2022, every single year saw more Americans leaving Ohio than arriving. n nEconomic policies have consequences, and Ohio’s policies for much of the last half-century made it less attractive to those seeking opportunity. The Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index quantifies what many Ohioans have long felt. In the first edition of that report in 2007, Ohio’s economic outlook ranked a dismal 47th out of the 50 states. n nLow economic freedom, high taxes, and burdensome regulations are not just abstract ideas — they are measurable barriers to economic growth and well-being. The contrast with Ohio’s neighbor to the west was very telling. While Ohio stagnated, Indiana pursued steady, incremental reforms — cutting taxes, controlling spending, and becoming a right-to-work state — while maintaining a predictable business climate. As a result, Indiana now ranks third best in the nation for economic outlook. n nPolicies, not luck or geography, explain the difference. But thankfully for Ohio taxpayers, their lawmakers have taken note, and their recent policy reforms suggest a willingness to learn from success rather than repeat failure. n nSince 2005, Ohio’s top personal income tax rate has been reduced from 7.2% to 3.1%, and in 2026 the new 2.75% flat tax will take effect. That’s lower than neighboring Indiana’s rate and among the lowest of any state that still taxes income. That matters — it matters a lot. When people and businesses can keep more of what they earn, they make different choices about where to live, invest, and hire. n nIndeed, 2023 marked a turning point for Ohio. For the first time since 1981, Ohio recorded a net in-migration of residents. The improvement is visible in the data: Ohio’s ranking in Rich States, Poor States has climbed from 47th in 2008 to 25th today. n nThe persistence of many burdensome local income taxes in Ohio blunts some of the impact of the state’s reforms. Tax reform is always a work in progress everywhere. However, the pattern is clear — the states gaining the most new residents across America are those that impose no personal income tax or generally have competitive tax burdens. Nine such states without a personal income tax exist today, and more — like Kentucky, Mississippi, and Oklahoma — are moving in that direction under current law. n nOhio’s recent tax reforms show incredible movement in the right direction. But the Buckeye State’s improvement isn’t limited to economic policy. The expansion of a genuine school choice system in Ohio signals a deeper transformation in how the state views opportunity and human capital with the expansion of the EdChoice school choice program. n nWhen tax cuts allow residents to retain more of what they earn, and when educational choice allows families to use those earnings to invest in the educational opportunities that will bear the best returns for their children — those potent engines for upward mobility begin to run in tandem. n nLower income taxes reduce the state’s drag on economic initiative and work, and broader school choice reduces one of the great barriers to human capital development and upward mobility. In combination, these policies improve Ohio’s ability to attract and retain both human and investment capital. n nA talented worker who sees more take-home pay and viable, high-quality schooling options for their children has less reason to leave — and more reason to stay. Meanwhile, entrepreneurs and investors already view Ohio’s policy climate as increasingly predictable, with incredible opportunities for growth in the years ahead. n nThe Ohio comeback story is still being written — but it is an incredible story, and they are just getting started. While Ohio was a state with an economic outlook in the bottom five nationally eighteen years ago, and had suffered from decades of out-migration, major policy accomplishments from Ohio lawmakers in recent years show that any state can make dramatic gains when you have the right leadership pursuing bold, principled, free-market ideas.
