OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
S.B. 256 Bill Analysis
135th General Assembly
Click here for S.B. 256’s Fiscal Note
Version: As Introduced
Primary Sponsor: Sen. Blessing
Effective date:
Mackenzie Damon and Paul Luzzi, Attorneys
SUMMARY
 Increases the basic state minimum wage to $12.00 per hour beginning January 1, 2025.
 Increases the basic state hourly minimum wage rate by $1.00 each year for the
following three years, beginning January 1 of the respective year.
 Increases the state hourly minimum wage rate for tipped employees to $6.00 per hour
beginning January 1, 2025.
 Increases the state hourly minimum wage for tipped employees by $.50 each year for
the following three years, beginning January 1 of the respective year.
 Requires, beginning January 1, 2029, the minimum wage rates to be adjusted annually
based on the Consumer Price Index, in accordance with Ohio’s constitutional minimum
wage requirements.
 Modifies the state’s earned income tax credit (EITC) for lower-income taxpayers,
including by offering a refundable credit option.
 Declares an emergency.
DETAILED ANALYSIS
Minimum wage law
State minimum wage for nontipped employees
The bill raises the state minimum wage rate to $12.00 per hour beginning
January 1, 2025. It also increases the hourly minimum wage by $1.00 each year for the
May 6, 2024
Office of Research and Drafting LSC Legislative Budget Office
following three years. The following table identifies the minimum wage under the bill an
employee who does not receive tips must be paid during the listed year.1
Hourly wage rate under the bill
Year
(nontipped employee)
2025 $12.00
2026 $13.00
2027 $14.00
2028 $15.00
Under current law, the basic state minimum wage is $10.45 per hour. The basic state
minimum wage is currently set pursuant to the Minimum Wage Amendment of the
Ohio Constitution (MWA). The MWA requires the basic state minimum wage to be increased
annually according to the Consumer Price Index or its successor index for all urban wage
earners and clerical workers for all items as calculated by the federal government, rounded to
the nearest five cents. However, the MWA allows laws to be passed that set the state minimum
wage at a rate higher than the rate calculated pursuant to the MWA.2 The bill establishes
scheduled increases in the minimum wage rate and, beginning January 1, 2029, requires the
Director of Commerce, who administers and enforces the law, to adjust the minimum wage
rate annually in accordance with the MWA.3
Currently, pursuant to MWA, employees who are under age 16 or who are employed by
a business with gross annual receipts of $385,000 or less in 2023 must be paid at least the
federal minimum wage rate, which is $7.25 per hour. Under the MWA and the bill, the amount
of gross annual receipts is adjusted annually based on the Consumer Price Index. The bill
permits these employees to continue to be paid the federal minimum wage rate. 4
State minimum wage for tipped employees
Under continuing law, tipped employees may be paid less than, but not less than half,
the basic state minimum wage rate if the employer is able to demonstrate that the employee
receives tips that combined with the wages paid by the employer are equal to or greater than
1 R.C. 4111.02(A)(1).
2 Ohio Constitution, Article II, Section 34a; see also Ohio Department of Commerce Division of Industrial
Compliance (ODC-DIC), State of Ohio 2024 Minimum Wage (PDF), which may be accessed by conducting
a keyword “minimum wage poster” search on the Department’s website: https://com.ohio.gov/.
3 R.C. 4111.02, with conforming changes in R.C. 4111.09 and 4111.14.
4R.C. 4111.02; Ohio Const., art. II, sec. 34a; 29 United States Code (U.S.C.) 206; ODC-DIC, State of Ohio
2024 Minimum Wage (PDF).
P a g e |2 S.B. 256
As Introduced
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the state minimum wage rate for all hours worked. Because the bill raises the state minimum
wage, the minimum wage for tipped employees ($5.25 per hour in 2024) would also increase.
The following table identifies the minimum wage under the bill a tipped employee must be paid
during the listed year:5
Hourly wage rate under the bill
Year
(tipped employee)
2025 $6.00
2026 $6.50
2027 $7.00
2028 $7.50
Relationship between state and federal law
The federal Fair Labor Standards Act6 (FLSA) and Ohio’s minimum wage laws both
specify minimum wages that an employer must pay the employer’s employees at least the
minimum wage. An employer may be subject to one or both laws. The FLSA specifies that if an
employer is subject to both laws, the employer is governed by the law that establishes the
higher minimum wage.7 Currently, Ohio has a higher basic minimum wage ($10.45 per hour in
2024) as compared to the basic minimum wage under the FLSA ($7.25 per hour). Thus,
employers subject to both laws pay the state rate under current law and under the bill.
Earned income tax credit modification
The bill modifies the state’s earned income tax credit, or EITC, for lower-income
taxpayers. Under current law, the state EITC equals 30% of the taxpayer’s federal EITC and is
nonrefundable, which means that the amount of the taxpayer’s credit may not exceed their tax
liability.
The bill gives taxpayers the option of claiming either the existing 30% nonrefundable
credit or a refundable credit equal to either (a) 12% of the federal EITC, if the taxpayer has a
dependent under the age of 3 or (b) 9% of the federal EITC, if the taxpayer does not. If the
taxpayer claims the refundable credit, the taxpayer would receive a refund of the amount by
5 R.C. 4111.02(B)(1); Ohio Const., art. II, sec. 34a; ODC-DIC, State of Ohio 2024 Minimum Wage (PDF).
6 29 U.S.C. 201 et seq.
7 29 U.S.C. 218.
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As Introduced
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which the credit exceeds their tax liability.8 The modified credit applies to taxable years
beginning on or after January 1, 2025.9
Federal earned income tax credit
The federal EITC is a refundable credit computed as a percentage of a person’s earnings
(including self-employment income). To qualify for the federal credit, the taxpayer’s earned
income and adjusted gross income must fall below a specified threshold. For 2023, those
thresholds are $17,640 for taxpayers without qualifying children ($24,210 if married filing
jointly), $46,560 for taxpayers with one qualifying child ($53,120 if married filing jointly),
$52,918 for taxpayers with two qualifying children ($59,478 if married filing jointly), or
$56,838 for taxpayers with three or more qualifying children ($63,398 if married filing jointly).
For 2023, the maximum federal earned income credit for a person or couple without qualifying
children was $600, with one qualifying child $3,995, with two qualifying children $6,604, and
with three or more qualifying children $7,430. The credit amount is phased out as a person’s
income increases.
In addition to the earned income limits, the taxpayer must also meet various other
eligibility requirements, including limits on investment income ($11,000 for 2023), minimum
and maximum ages if qualifying without children (25 to 65 years), and qualifications for
qualifying children.10
HISTORY
Action Date
Introduced 05-01-24
ANSB0256IN-135/sb
8 R.C. 5747.71 and 5747.98.
9 Section 3.
1026 U.S.C. 32; see also IRS Earned Income and Credit Tables, available by conducting a keyword “EITC
Tables” search on the Internal Revenue Service’s website: www.irs.gov.
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As Introduced


Statutes affected:
As Introduced: 4111.02, 4111.09, 4111.14, 5747.71, 5747.98