The State of Ohio just fired a shot in the ongoing economic backyard brawl — though it hasn’t made major headlines in West Virginia, it should. Ohio is positioning itself to be far more competitive than the Mountain State when it comes to tax policy and economic climate.
Ohio Governor Mike DeWine recently signed the state’s annual budget into law, which includes sweeping tax changes. The plan lowers the highest income tax bracket from 3.5% to 3.125% in tax year 2025 and then moves to a flat tax rate of 2.75% for all taxpayers starting in 2026. That’s right — Ohio is abandoning its progressive income tax structure.
Not everyone is cheering.
“Ohio lawmakers have enacted a budget that will make teachers and truck drivers pay the same income tax rate as billionaires,” said Hannah Halbert, Executive Director of Policy Matters Ohio.
But that critique, while punchy, doesn’t tell the full story. Flat taxes aren’t about punishing the middle class — they simplify the system and eliminate the stealthy tax hikes caused by inflation (also known as bracket creep). The reality is: the more you earn, the more you benefit from a tax cut. That isn’t immoral — it puts more dollars into the hands of those who earned them. Many will spend those dollars (stimulating consumption and boosting tax revenues in other areas), save them (strengthening household financial stability), or donate them (supporting charitable efforts in a time of strained public budgets).
Meanwhile, West Virginia didn’t advance its tax reform efforts during the last legislative session, instead focusing heavily on social issues. Critics have dubbed it a “do-nothing” session from an economic perspective.
The pressure is now on. Ohio’s move follows Kentucky (3.5%) and Pennsylvania (3.07%) — both of which already have flat tax systems. If West Virginia doesn’t respond, residents living near the border may increasingly see little reason to stay. Take Parkersburg and Marietta as an example: same river, similar lifestyle — but one puts more money in your pocket. Why wouldn’t someone move?
Yes, Ohio does have higher property taxes, but those taxes function more like user fees — you get something in return. Better schools, more services, and arguably a more educated workforce, which helps everyone.
Another factor: West Virginia’s failure to adjust marginal income tax brackets annually. Without indexing for inflation, the state inadvertently imposes tax hikes year after year as wages rise with the cost of living. A flat tax eliminates this dynamic entirely — no brackets means no bracket creep.
Bottom line: none of this bodes well for West Virginia in the long-term economic fight to retain residents and attract jobs. Data continues to show population loss over the long term, and tax competitiveness matters.
So, the real question is this: Will lawmakers and elected leaders take up the issue next session?
He who has a crystal ball speak now to me.
Editor’s Note: tax information for states highlighted in article available below.