Income Tax Levy Resources

Lebanon City Schools has placed a 1.0% Earned Income Tax Levy on the November 3, 2026 ballot.

Yes. Passing the levy delivers a total property tax roll back of 2.15 mills:

• Phase 1 (Jan. 2027): Early payoff of the bond issue that paid for additions to Lebanon High School and Bowman Primary School (2.5 years ahead of schedule), saving taxpayers more than $210,000 in interest and reducing taxes by 1.38 mills.
• Phase 2 (Jan. 2028): The district will stop collection on the Permanent Improvement (PI) levy, providing an additional 0.77 mills of relief.
• The 2.15 mills of property tax relief will be permanent.

One mill of property tax equals $1 for every $1,000 of a property's appraised value. Ohio calculates taxable value at 35% of a property's appraised value. So, 1 mill generates $35 per $100,000 of appraised market value of a home. 

For a home valued assessed at $420,000, the 2.15 mill reduction will equate to a savings of $277.66. 

To see your home's value and the amount that will be reduced from your property tax bill, follow these steps:

1. Search for your property on the Warren County Auditor's website.
2. Once on the Property Summary Page, click on Tax Bill on the left side.
3. Click the Distribution tab.
4. You can view different taxes paid for the property. Under Schools, the 2.18 reduction will be for the 14001 and 20011 amounts.

• For individual homeowners: A 2.15-mill reduction equals $75.25 per year for every $100,000 of market value on a home.
• For the school district as a whole: Based on the district's total taxable value for tax year 2025, a 2.15-mill reduction represents approximately $3.9 million in annual property tax savings across the entire community.

If the income tax levy passes, the Lebanon City School Board has approved the permanent elimination of the 1.38 bond levy and the 0.77 permanent improvement levy.

A. The following language will be on the ballot: 

05 PROPOSED INCOME TAX
Lebanon City School District

A majority affirmative vote is necessary for passage

Shall an annual income tax of 1 per cent on the earned income of individuals residing in the school district be imposed by Lebanon City School District, for 10 years, beginning January 1, 2027, for the purpose of current expenses?

FOR THE TAX

AGAINST THE TAX 

A. Ohio law does not allow it. The Board of Education passed a resolution in July stating that, if the 1% earned income tax passes, the District will stop collecting 2.15 mills of existing property taxes: 1.38 mills for high school/primary school bond debt and 0.77 mills for permanent improvements. Ohio law only allows a property tax reduction to be included on a school district income tax ballot question when the existing property tax is for current operating expenses. The 2.15 mills the Board has committed to stop collecting are for bond debt and permanent improvements, not current operating expenses. Because the property taxes serve a different purpose, their reduction cannot be included as part of the income tax ballot language.

While the board cannot unilaterally add taxes, they have the legal right to "give back" or cease collection of existing taxes. The board passed a resolution in July stating that if the 1% earned income tax passes, they will stop collecting specific property taxes (1.38 mills for high school/primary school bonds and 0.77 mills for permanent improvements), resulting in a 2.15-mill reduction.

A 0.75% rate was considered, but it would only last five years and would not allow the district to offer property tax relief. The 1% rate is intended to keep the district off the ballot for new money until at least 2032.

This levy will be used for general operating expenses and capital expenses.

This levy will generate $13.5 million per year, equivalent to 7.81 mills of property tax. Due to how these taxes are collected at the state level, it will take 18 months for an earned income tax levy to get to full collection.

These two numbers measure different things. The $13 million over four years figure is NOT the District’s total budget deficit.

The yellow bar in the chart above (click here to see it larger) shows the annual amount that District expenses will exceed District revenues.  The total “deficit spend” over the next four years is estimated to be around $27.7M.  Because expenses are increasing at a rate of 3.79%, but revenues are only growing 1.58%, the District will continue to see a larger “deficit spend” each consecutive year.

The $13 million over four years figure actually represents revenue the District previously expected to receive over the next four years but is now projected not to receive because of changes in Ohio property-tax law. 

The proposed 1% earned income tax is estimated to generate approximately $13.5 million per year once fully collected. That revenue would not simply offset a one-time $13 million loss. It would become an ongoing revenue source used to address the District’s growing annual operating gap, replace the Permanent Improvement levy that the Board has committed to stop collecting, and provide funding for capital needs. Full income-tax collections also phase in over approximately 18 months rather than arriving all at once. 

In short: the $13 million is a reduction in previously expected revenue over four years; the $13.5 million is an estimated annual revenue source intended to address an ongoing and growing financial gap.

If you are a wage earner, at the 1% earned income tax rate it will cost $10 for every $1,000 of earned income. Only earned income (wages, salaries, tips, and self-employment income) is taxed with this levy. If you receive income from social security, pensions, retirement-account withdrawals, investments, or similar sources, you will not pay for this levy; your cost will be $0.

This levy is for 10 years.

The District received additional property tax revenue, but not at the same rate that property values increased. During the 2024 reappraisal, residential property values increased approximately 26%. However, the District's General Fund real estate property tax revenue increased by 10.6%, or $3.7 million, from FY2024 to FY2025. However, operating expenses also increased by 7.3%, or $5 million, with rising special education costs and employee benefit expenses contributing to that increase. The additional revenue helped improve the District's financial position, but it did not eliminate its long-term financial challenges.

Looking ahead, recent changes to Ohio's property tax laws have reduced anticipated revenue growth. According to the August 2026 financial forecast, total revenue is projected to grow by approximately 1.6% annually, while expenses are projected to increase by 3.8% annually. The proposed 1% earned income tax is intended to address this projected gap between revenue and expenses. If approved, the Board has also committed to eliminating 2.15 mills of existing property taxes to provide relief for retired individuals and those on fixed incomes.

No.  Ohio law stipulates that a school district income tax is on the income of district residents, not on businesses operating within the district. Businesses as an entity are not subject to the school district income tax.  

Ohio law defines the "taxpayer" of a school district income tax as an individual who lives within the school district and has taxable school district income. A company with a store, office, or facility in the Lebanon City School District would not pay the school district income tax because it is not an "individual." Additionally, an employee who works in the district but lives outside the district would not pay the district income tax.

As an important distinction, business income received by a resident of the District would be included in that individual's taxable income if the District were implementing the Traditional Income Tax (rather than the Earned tax). However, this would also tax other forms of income, like retirement and investments.

Ohio Revised Code references: R.C. 5748.01(E), (G), and (H); R.C. 5747.021.

Ohio law generally requires employers to withhold and remit school district income tax for employees who live in a taxing school district. Employers cannot simply choose not to withhold the tax and leave employees responsible for making their own payments. Certain exceptions may apply, but withholding is generally mandatory under Ohio Revised Code Sections 5747.06 and 5747.07.

Ohio law stipulates that a school district income tax is on the income of district residents. Ohio law defines the "taxpayer" of a school district income tax as an individual who lives within the school district and has taxable school district income. An employee who works in the district but lives outside the district would not pay the district income tax.

Because this is an earned income tax, it would not apply to income from Social Security, pensions, retirement-account withdrawals, investments, or similar sources. If all of your income comes from these sources, your cost would be $0 per month. The tax would apply only to wages, salaries, tips, and self-employment income. At a 1% rate, the cost would be $10 for every $1,000 of earned income.

No. 401k distributions are considered retirement investment income, not earned income (which only applies to W-2 wages). An earned income tax applies only to income earned from working, such as wages, salaries, tips, and net income from self-employment. It does not apply to Social Security, pensions, retirement-account withdrawals, interest, dividends, or capital gains.

The main difference is which types of income are taxed. An earned income tax applies only to income earned from working, such as wages, salaries, tips, and net income from self-employment. It does not apply to Social Security, pensions, retirement-account withdrawals, interest, dividends, or capital gains. A traditional school district income tax applies to a broader range of income and is generally based on the taxpayer’s Ohio adjusted gross income. This can include wages and self-employment income, as well as certain retirement, investment, and other income. Because Lebanon City Schools is proposing an earned income tax, residents whose income comes entirely from Social Security, pensions, investments, or other non-earned sources would not pay the tax.

The Board considered all forms of revenue, but ultimately chose an Earned Income Tax because of the concern with rising property taxes. To generate the same amount of revenue, the District would need to place a 7.81 mill property tax levy on the ballot. State property tax reform has reduced the district's anticipated revenue by $13 million over the next four years, with no increased revenue from the state. With the passage of the property tax reform, we will no longer see increases on our property tax levies, and legislators have encouraged us to diversify our revenue to become less dependent on property taxes. Unlike fixed property taxes, an earned income tax is scalable; it grows naturally as wage-earning families move into active residential developments across our community. As new housing developments are built, the district sees an increase in revenue with an earned income tax levy.

Without a new source of revenue, our district will face a staggering $8.5 million yearly deficit by 2030. The district's cash balance policy requires 90 days of cash on hand, which happens in FY28. Without this levy, our available operating cash will drop to a dangerous 16 days of funding in 2030, threatening our operational stability. The negative balance in 2031 requires the Treasurer to present a plan to the State of Ohio.

Yes. Over the past two years, the district has proactively implemented targeted cost-savings measures, saving more than $2.42 million through operational efficiencies, strategic staffing adjustments, and competitive grant funding.

Key savings and non-tax revenues include:

• Staffing Restructuring ($800,000 since 2024): Realized through natural attrition, retirements, resignations, and strategic position repurposing, all while preserving classroom instruction and high-needs student support.
  
  
• Grant Funding (more than $900,000): Secured outside grants for capital and safety projects to avoid using local taxpayer dollars. Funded improvements include water filling stations, floor cleaning machines, weight room flooring at Lebanon High School, safety door film, stop-arm cameras on buses, and bus technology upgrades.
  
  
• Transportation Efficiency Project (approximately $280,000 since 2024): Following a Transportation Efficiency Study, shifting school start times by 15 minutes allowed us to streamline operations. We have been able to implement cost avoidance measures, such as fewer routes with fewer drivers, reducing reliance on private transportation, and reducing future fleet replacements (approx. $100,000/bus). This has allowed us to achieve more than $100,000 of annual savings and receive annual efficiency bonuses from the Ohio Department of Education totaling $80,000 since 2024.
  
  
• Fleet Management ($440,057 over 3 years): Reduced ongoing fuel and maintenance costs by replacing aging buses with newer, more efficient models.

Taxpayers will pay for this earned income tax through employer withholding, quarterly estimated payments, and annual returns. Employers are required to withhold the tax and submit payments to the state. The Ohio Department of Taxation administers and collects this local tax based on where you live, not where you work. Taxpayers will be required to file Ohio Form SD100 each year to report their earned wages and net self-employment earnings, even if they owe zero tax.

The Earned Income Tax Levy secures stability through 2033, prevents major cuts to academics and special education, lowers the tax burden on seniors and retirees via 2.18 mills of property tax relief, upgrades facility maintenance power, and diversifies district revenue as our community grows.

Yes. The Warren County Auditor and state officials have recommended diversifying revenue to reduce reliance on property taxes. Nearby districts like Carlisle and Kings have already moved toward this model. Click here to see other districts across the state who have adopted a similar model.

The school district income tax was deliberately created by the Ohio General Assembly as an alternative local revenue source for schools. The income tax is relatively recent compared with the property tax:

• 1979 – First authorization. The Ohio General Assembly first gave school districts authority to levy an income tax, but only for the narrow purpose of repaying a state loan. That version was never used by school districts. 
• 1981 – Broader school district income tax created. Ohio enacted Chapter 5748 of the Ohio Revised Code, allowing school districts to ask voters to approve an income tax for broader school purposes. The original tax was based on Ohio taxable income.
• 1983 – Ohio temporarily stopped new districts from adopting it. By August 1983, voters in six school districts had approved income taxes. The General Assembly then repealed most of the authority, preventing additional districts from adopting the tax while allowing those six to continue.
• 1989 – Authority restored statewide. The legislature reinstated the law, once again allowing school districts throughout Ohio to place an income tax before voters. A $50 senior-citizen credit was also established.
• 1991–1992 – More flexibility. Beginning in 1991, districts could propose income taxes for a limited number of years rather than only as continuing levies. In 1992, Ohio also authorized a combined ballot issue involving an income tax and a property-tax reduction.
• 2005 – Earned-income option added. This was a major change. Districts were given a choice between the traditional Ohio adjusted gross income–based tax and a new earned-income tax, which generally applies to wages, salaries and self-employment income rather than investment and retirement-type income.

New wage earners moving into new homes would be subject to the new earned income tax.

The district currently has capacity and has educated more students in the past than are currently enrolled. While we are currently using all available classrooms, we have the ability to accommodate some growth before we would need to add on. Buildings like Bowman, Donovan, Junior High, and High School were specifically designed to be expanded if needed. Building a new school is a multi-year process, and the district is currently assessing long-term needs to proactively plan for potential future needs. 

The 1% earned income tax generates sufficient revenue to set aside more money than we currently receive from the Permanent Improvement (PI) levy without having to go back to taxpayers for a renewal or increase to the current PI levy.  Currently the PI levy generates $1.4 million. The 1% earned income tax allows us to set aside $2.0 million for Permanent Improvements. In the first few years of collection the District will allocate part of the collections to a Capital Projects fund to be used for future facility needs to modify existing spaces to meet the current needs of students.

If the levy fails, the district will face an $8.5 million annual shortfall. To balance the budget, the district would be forced to make severe, disruptive cuts to academic programs, student services, and staffing levels. Staffing is 80 percent of the district's budget. The only way to achieve significant savings would be to reduce staffing. To save $8.5 million, approximately 100 staff members would need to be cut. Additionally, by 2030, the district's cash reserves would drop to just 16 days of operation, far below the recommended 90-day safety threshold the board has established for cash balance on hand.

The District requested new money through an emergency property tax levy during November 2019, which voters approved.

The school district income tax and the municipal income tax differ in many ways: municipalities collect the tax from both residents and non-residents working in the municipality, but the school district income tax is only on residents. Municipal taxes are levied on businesses whereas the school district income tax is on individuals only. The tax base for municipalities is generally wages, salaries, other compensation, or net profits of a business, but the school district income tax can be on either all sources of adjusted gross income (i.e., Ohio modified adjusted gross income less exemptions) or just on earned income.

Voters originally approved three separate emergency property tax levies: 2005, 2011, and 2019.  In November 2022, voters approved combining these three separate levies into a single Substitute Levy that would continue to raise $12.2 million from the original taxpayers.  However, a substitute levy also collects additional property taxes from any new homes that are built in the area.  For the upcoming tax year, we anticipate collecting approximately $13.3 million as a result.

Due to recent state property tax reform, substitute levies will be phased out and replaced by "fixed sum levies." Lebanon's substitute levy will continue to grow with new builds until it expires at the end of 2032. At that point, it will be renewed as a fixed sum that no longer grows with new construction.

Unless there are further changes to property tax laws or state funding, the district does not expect to ask voters for additional funding within the next eight years, until at least 2034.

Taxpayers will pay for this earned income tax through employer withholding, quarterly estimated payments, and annual returns. Employers are required to withhold the tax and submit payments to the state. The Ohio Department of Taxation administers and collects this local tax based on where you live, not where you work. Taxpayers will be required to file Ohio Form SD100 each year to report their earned wages and net self-employment earnings, even if they owe zero tax. There is a 1.5% fee retained for state administrative purposes; however, this fee is already accounted for when the state completes the district's Estimated Income Tax Yield and Equivalent Millage report.

The new tax becomes effective on January 1. The first payment will be received by the school district in April of that year (school districts can count on that payment being relatively small). Districts will receive four payments per calendar year, one each in January, April, July, and October. Each payment will be for the amount collected during the prior quarter. It will take approximately 1.5 years (six quarters) for districts to receive the full amount of taxes liable from the first year it is levied because of how the tax is collected. Employer withholding comes in throughout the year, but individual annual returns are not due until the following calendar year. 

Special education costs are rising due to a steady increase in the number of students requiring specialized services, along with the growing complexity of those educational and support needs.

Key factors driving these cost increases include:

• Enrollment Growth: Over a four-year period, the number of students with disabilities (ages 5–21) grew by 161 students, a 23.7% increase. Today, students with disabilities represent approximately 17% of the district's total enrollment.
  
  
• High Per-Capita Costs: Educating a student with disabilities requires an average cost per capita of $18,283.10. In fiscal year 2025, special education expenses totaled over $14.7 million.
  
  
• Specialized Out-of-District Placements: Projected costs for 49 students requiring specialized educational programs total $3.46 million for the 2026–2027 fiscal year, with individual programs costing as much as $90,000 per student.
  
  
• Required Support Staffing: To maintain compliance and provide quality inclusive care, the district has had to hire additional certified staff, including intervention specialists, instructional aides, and behavior support personnel.

You can view a list of school districts with a school district income tax by clicking here. Click here to see an interactive map.

District officials can only provide factual information. They plan to send mailers, conduct "coffee chats" and presentations to local groups, and will maintain a Frequently Asked Questions page on the district website.

Contact Roy MacCutcheon for information about the levy campaign: (513) 836-0055.