DeWine’s budget proposal features sin tax hikes to fund new programs

Hannah News Service contributed to this report 

Gov. Mike DeWine on Feb. 3 announced his FY 2026-2027 executive budget proposal, and higher taxes on tobacco, sports gambling and adult use cannabis would pay for several new programs.  

The Ohio House Finance Committee held three hearings this week on the budget proposal, and more resources are available here as we await the legislative language and bill number. Ohio’s fiscal year 2026 begins July 1, 2025.  

The tobacco tax hike would pay for a new refundable child tax credit, while the sports gambling tax increase would help pay for professional sports stadiums and youth sports. The adult use cannabis tax increase would pay for a new marijuana possession expungement program as well as existing programs such as the law enforcement training program, 988 Suicide and Crisis Lifeline, local drug task force grants and driver training programs. 

Under the proposed budget, the $1.60 per pack cigarette tax would increase to $3.10 per pack. Other tobacco products would be taxed at 42% of the wholesale price, up from the current rate of 17%. The tax on vapor products would double to 20 cents per milliliter. Additionally, non-combustible non-tobacco products containing nicotine would be taxed at 20 cents per milliliter. The tobacco tax proposal is estimated to increase revenue from $703.5 million in FY25 to $1.11 billion in FY26 and $1.12 billion in FY27. The money would go toward a new refundable 5% child tax credit based off your annual income that could be as much as $1,000 per child age 6 or younger. 

The executive budget proposal would increase the sports gaming receipts tax from 20% to 40%, DeWine said. When sports betting was legalized, the tax was 10%. The last operating budget, 135-HB33 (Edwards), increased that tax from 10% to 20%. 

The tax increase would help pay for professional sports stadiums like the new suburban dome being proposed by the Cleveland Browns. Additionally, the new fund could help pay for costs associated with youth sports, DeWine said, noting that many children across Ohio are not participating in sports because of fees. The proposed budget would establish a commission with executive and legislative appointees to oversee the fund. 

The cannabis tax provisions in the proposed budget are similar to those included in 135-HB86 (LaRe), DeWine said. That bill would have increased excise taxes on adult use cannabis from 10% to 15%. 

Overall, the General Revenue Fund (GRF) is currently projected to be just over $30 billion in FY26, which is 2.4% higher than FY25. The GRF is projected to be $30.9 billion in FY27, a 2.8% increase over FY26. 

The All Funds budget is projected to be $108.6 billion in FY26, a 2.9% increase from FY25. The All Funds budget in FY27 is projected to be $110.7 billion, a 1.9% increase from FY26. 

The budget expects total tax revenue to reach $28.44 billion in FY25, increasing by 1.8% over the previous year. 

“The forecast reflects current law (or ‘baseline’) revenue amounting to $29.62 billion in FY26, growing by 4.1% from FY25, and amount to $30.58 billion in FY27 with a 3.2% growth rate from FY26,” the Ohio Office of Budget and Management (OBM) FY26-27 Blue Book says. 

On Medicaid, the caseload is projected to increase from an estimated average monthly enrollment of 2.91 million individuals in FY25 to 2.92 million in FY26 and 2.93 million in FY27. 

Other budget provisions mentioned by the governor include the following: