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HB 854

Provide tuition-free public higher education; levy taxes

136th Legislature (2025-2026) Introduced by Munira Abdullahi and 5 co-sponsors

HB 854 would provide eight semesters of free tuition for Ohio residents at public colleges, funded by new and adjusted taxes via the Ohio Free College Fund.

Referred to committee
#education #highereducation #taxation
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Bill Summary · HB 854

Overview

  • Bill: HB 854
  • Session: 136 (2025-2026)
  • Jurisdiction: Ohio
  • Purpose: Create a state-subsidized, tuition-free public higher education program for Ohio residents who are accepted for enrollment, funded by new and increased taxes. The bill also reorganizes and expands certain tax and fee provisions to support funding.

Main purpose and intent

  • Provide eight semesters of free tuition at public colleges and universities for resident students admitted for enrollment.
  • Fund the subsidy through additional taxes and a dedicated Ohio Free College Fund in the state treasury.
  • Reorganize and consolidate tax administration and transfer-fee provisions to enable funding and administration of the program.

Key provisions and changes

  • Tuition-free public higher education

    • Beginning with the academic year after the act’s effective date, state-supported institutions of higher education may not charge instructional, general, or special fees to resident students enrolled in eligible programs.
    • Each state institution must offer the equivalent of eight semesters of free higher education to eligible resident students it accepts.
    • The chancellor of higher education must develop a distribution method to annually allocate funds from the General Assembly to subsidize this program.
    • The Ohio Free College Fund is established in the state treasury to finance the program and cover administration costs. The fund is administered by the Chancellor and may be used for implementing the program and related administration.

  • Funding and tax structure

    • The bill repeals certain existing tax provisions and enacts new tax rules to fund the subsidy, including an earmarked revenue stream to the Ohio Free College Fund.
    • A new 1% of the value transfer fee (on certain real property transfers over $2 million) is designated to subsidize college tuition, with exemptions for transfers described in various listed exemptions.
    • A new or adjusted income tax mechanism is introduced to fund the free college program, including a dedicated revenue stream from individual, trust, and estate taxes with specified rates and income thresholds.
    • A new annual tax within Section 5747.02 (and associated subsections) is introduced to fund the subsidy, specifically directing revenue to the Ohio Free College Fund.
    • Local and state distribution rules ensure a portion of general revenue supports higher education subsidy payments, mental health services, elderly and disability services, and other constitutionally mandated distributions.

  • Administrative and procedural changes

    • The tax commissioner is tasked with implementing rules for uniform administration of the new transfer-fee and ensuring consistent collection.
    • Various existing transfer tax and fee schedules are amended or repealed and replaced with the new framework.
    • Several sections establish specific payment schedules for withholding taxes, electronic filing requirements, and penalties/interest provisions related to withholding taxes to support the new funding scheme.
    • The act outlines reporting requirements for professional employer organizations and other withholding entities, with a focus on funding and administration of the tuition subsidy.

Who would be affected

  • Ohio residents seeking to attend public colleges and universities, who would qualify for eight semesters of free tuition if admitted.
  • Public higher education institutions, which would implement and administer the free-tuition benefit for eligible resident students.
  • Taxpayers and employers, who would bear new or adjusted tax and withholding obligations to fund the subsidy (via the Ohio Free College Fund and related mechanisms).
  • Local governments and school districts, through distributions tied to the new tax structure and reimbursement provisions.

Procedural and timeline aspects

  • Effective date language indicates implementation beginning with the academic year following the act’s effective date.
  • Section 3345.012 outlines the establishment of the Ohio Free College Fund and requires the Chancellor to adopt implementing rules.
  • Repeals of existing tax sections (319.202, 319.54, 5747.02, 5747.03, 5747.07) and enactment of new or amended provisions indicate a substantial overhaul of tax administration to support funding.
  • The act specifies that the amendment to 5747.02 applies to taxable years beginning on or after January 1, 2025.

Summary in plain terms

HB 854 aims to eliminate tuition for Ohio resident students attending public higher education institutions by providing eight semesters of free tuition for those accepted for enrollment. It creates a dedicated funding mechanism through new and adjusted taxes and a state-funded Ohio Free College Fund managed by the Chancellor of Higher Education. The bill modifies transfer- and income-tax-related provisions, establishes administrative rules, and outlines payment and reporting requirements to support the subsidy while maintaining other state and local funding commitments. The changes would be phased in starting the academic year after the act’s effective date.

Compiled from official sources — confirm details with the bill’s official record.

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