Law brings changes to property tax bills

PORT CLINTON — Ohio homeowners will begin seeing changes to their property tax bills this year as House Bill 186 takes effect. The newly enacted law will bring new tax credits, expanded homeowner exemptions and introduce limits on future school tax increases, providing financial relief for Ohioans. The law, which became effective March 20, was approved in response to steep property tax increases across much of the state over the past several years. What are the changes? Ottawa County auditor Jennifer Widmer recently informed community members about the changes. She expected the legislation to create three major changes to property tax bills 1. Cap future increases on school property taxes Widmer stated that the bill would primarily cap future increases in school property taxes that are not subject to voter approval, limiting them to the rate of inflation. Previously, the unvoted-for inflationary increases could exceed that rate. "This really has not been an issue until the very large property value increases that Ohio has experienced in the past six to eight years," Widmer said. 2. Allow homeowners to receive a reimbursement The law also creates a new one-time adjustment that will appear on many homeowners' second-half 2026 property tax bills. Widmer added that the credit reimburses taxpayers for unvoted school taxes paid as a result of the 2024 revaluation. For future revaluations and triennial updates, the Ohio Department of Taxation will recalculate the credit to ensure school districts receive only "additional increases at the value of inflation." For example, Widmer said that the Benton-Carroll-Salem School District in Oak Harbor received about $1.8 million in additional revenue from the 20-mill floor increase in the 2024 revaluation. The new legislation restricts the size of the increase and limits it to the inflation rate, set at approximately 13% over three years. Based on calculations, the school district's inflation adjustment amounted to a little more than $1 million, resulting in $800,000 being returned to taxpayers. 3. Eliminate a non-business credit The third significant update broadens tax relief for owner-occupied homes. Over the next four years, the state will slowly eliminate the non-business credit for most residential properties while boosting the owner-occupied credit. "Currently, every residential property receives a non-business credit," Widmer said. "The owner-occupied credit is only received on a person's primary residence and only by application. House Bill 186 will slowly phase out the non-business credit (but will keep it for agricultural properties) and will increase the percentage of the owner-occupied credit. "This will provide a greater credit to owner-occupied homes over four years," she added. Widmer added that it is "really important" that homeowners reach out to their county auditor's office to apply for the owner-occupied credit for their primary residence or if they have any questions on their tax bills. For those living in Ottawa County, Widmer said they can go to the Ottawa County auditor's website to browse forms and search for "form DTE-105C." Impacts of the '20-mill floor' Much of House Bill 186 addresses the effects of Ohio's long-standing 20-mill floor, which guarantees school districts a minimum level of operating revenue. Under existing law, most voted property tax levies are reduced as property values rise, so they generate roughly the same revenue approved by voters. School operating levies, however, can be restored to a minimum of 20 mills, resulting in higher tax bills even without voter approval. Rather than eliminating the 20-mill floor, House Bill 186 limits future increases by tying additional school revenue to inflation. "Going forward, this legislation makes sure that, while there will still likely be property tax increases, they cannot spike in the same fashion that they did in the last six to eight years," Widmer said. The increase in revenue to taxing entities — such as schools, counties, townships and others — will be capped at inflation. Widmer said House Bill 186 is an important first step, but it does not solve the broader issue of how Ohio funds public education. "I do not believe we can solve the property tax issue without first addressing how we fund education in the state," Widmer said. Ohio relies more heavily on local property taxes to fund K-12 schools than many other states, leaving homeowners responsible for a significant share of education costs. As homeowners receive their updated tax bills, Widmer encourages anyone with questions about their credits or exemptions to contact their county auditor's office. Definitions Here are some terms to understand when looking at House Bill 186: • Assessed value equals county auditor's appraised value times 35% • 1 mill is equal to $1 per $1,000 of assessed value • Inside millage is authorized in the Ohio Constitution for up to 10 mills that all Ohioans pay. This millage is divided among a school district, county and political subdivision like a city, township or village. Inside millage is inflationary, meaning that an increase in value will equate to a proportional increase in what one pays. • Outside millage is authorized by a vote of the people. Citizens of a taxing jurisdiction must approve a millage rate, which is voted on. But House Bill 920, approved by the Ohio General Assembly in 1976, makes outside millage non-inflationary. This means that as values in a taxing jurisdiction increase, the effective rate of outside millage levies decreases by a proportional amount. This keeps the dollar amount one owes the same. • Property taxes owed equals assessed value times effective tax rate in mills. The effective tax rate is the tax rate in terms of the non-inflationary House Bill 920 mentioned. A school tax might be 60 mills, but the effective rate is only 35 mills. • 20-mill floor: School districts get the lion's share of property taxes — from about 50% to 70% — of the total amount collected. They are guaranteed a minimum 20-mill floor, plus a share of a guaranteed 10 mills that is shared by townships, villages, cities and county governments. Source: Erie County treasurer's office