On November 4, 2025, Madison Local School District will have a 1.5% Earned Income Tax Levy on the ballot for voter approval. Below are some Frequently Asked Questions regarding the initiative.
What is an Earned School District Income Tax (SDIT)?
A school district income tax is separate from federal, state, and city income taxes. SDIT revenue only goes to the schools and is only assessed to those who live within the school district boundaries. For the earned SDIT, only wages, salaries, and other compensation and net earnings from self-employment (including income from partnerships) will be taxed. The other compensation and net earnings from self-employment are taxed only to the extent the income is included in one’s modified adjusted gross income (adjusted gross income in Ohio is “modified” if a business income deduction is taken).
What types of income are not considered Earned, and therefore will not be taxed?
Social Security benefits, interest, dividends, retirement/pensions, capital gains, unemployment, workers' compensation, lottery winnings, profit from rental activities, alimony, disability, child support, welfare benefits, trust distributions, and all other income that is not earned income but is part of the Ohio adjusted gross income.
Who will pay the Earned Income Tax?
Only those residents who reside in the Madison Local School District and are earning a wage will pay the Earned Income Tax. If you work within the Madison Local School District, but do not live in the district, you will not be assessed the SDIT.
If I don’t earn wages, and I am a homeowner in the Madison School District, will the passage of the Earned SDIT tax affect me?
Yes, it will affect you through a reduction in your property taxes. On July 16, 2025, the Madison Local Board of Education passed a resolution to suspend collections on the 2023, 7.5 mill property tax levy if the Earned Income Tax passes. If the Earned Income Tax levy passes, all homeowners of the Madison Local School District will have their property taxes reduced as a result of the district no longer collecting property taxes from the 7.5 mill levy that was passed in 2023. The reduction will take place for all homeowners, including those who don’t pay any Earned Income Tax.
How much will the Earned SDIT cost?
Each individual’s tax is determined by multiplying the taxpayer’s Ohio Adjusted Gross Income times .015. Every $1,000 of Ohio Adjusted Gross Income will cost the taxpayer $15 in Earned School District Income Tax.
Ohio Adjusted Gross Income X .015 = Earned School District Income Tax
How is the SDIT collected?
The SDIT is collected in the same manner as the state income tax: through employer withholding, individual quarterly estimated payments, and annual returns. Employers are required to withhold the tax and submit payments to the state under the same rules and guidelines as they currently use to withhold the state income tax. Individuals subject to the tax are required to file an annual SDIT return.
Who collects the SDIT?
The Ohio Department of Taxation collects the SDIT. All tax forms are filed with the Ohio Department of Taxation, and all taxes due are paid to the state. Madison will receive quarterly distributions from the State of Ohio.
How does my employer know to withhold the SDIT from my paycheck?
By law, you must inform your employer if the SDIT levy passes.
Why the change from a property tax to an income tax?
Between April and June, 2025 the Board of Education worked diligently to develop a tax policy that they believe is grounded in fair, balanced taxation of the residents while establishing targets to achieve financial stability. Through an analysis of the district’s demographics and being considerate of the community’s concern over rising property taxes, the Board determined an earned income tax would be the most fair and balanced tax for the community as a whole. An earned SDIT would provide property tax relief for all homeowners, especially those on a fixed income, while also providing a taxation method for residents who are not homeowners but live in the district while earning a wage.
What will the money be used for?
Because schools are a service industry, and approximately 85% of the district’s expenditures are for salaries and benefits, a majority (approximately 85%) of the new revenue will be spent on salaries and benefits. The rest of the increase in funding will go towards expenditures such as utilities, facility maintenance, transportation/busing, contracted student instructional costs, and all other day-to-day operational costs.