SeeSALT Blog
On August 13, 2026, the Ohio Supreme Court held that the regressive rate structure of Ohio’s financial institutions tax (“FIT”) does not violate the dormant Commerce Clause as applied to Dollar Bank, FSB, a Pennsylvania-based bank with branches in Ohio. 
Dollar Bank argued that the FIT was internally inconsistent because, if every state adopted an identical tax, the bank would owe more tax in the aggregate than if it conducted the same business solely in Ohio. Although the court accepted Dollar Bank’s supporting calculations, it rejected the bank’s assertion that this result violated the Commerce Clause.
The FIT applies to banks and other financial institutions for the privilege of doing business in Ohio. The tax base is total Ohio equity capital, which a bank calculates by apportioning its total equity capital to Ohio using a gross receipts factor. After apportionment, the bank applies the following rates: (i) 0.8% on the first $200 million of Ohio equity capital; (ii) 0.4% on Ohio equity capital greater than $200 million and less than $1.3 billion; and (iii) 0.25% on Ohio equity capital of $1.3 billion or more.
Dollar Bank argued that the FIT’s regressive rate structure was internally inconsistent and therefore violated the Commerce Clause as applied. The internal consistency test “‘looks to the structure of the tax at issue to see whether its identical application by every State in the Union would place interstate commerce at a disadvantage as compared with commerce intrastate.’” Dollar Bank, FSB v. Harris, Slip Op. No. 2026-Ohio-3069, para. 16 (Ohio Aug. 13, 2026) (quoting Comptroller of Treasury of Md. v. Wynne, 575 U.S. 542, 562 (2015)). To support its argument that the FIT was internally inconsistent, Dollar Bank calculated that for 2017 it would owe about $5.1 million in the aggregate if every state adopted the FIT and about $4.2 million if it conducted the same business entirely in Ohio.
The Ohio Supreme Court nevertheless upheld the FIT. Explaining that “the primary concern of the internal-consistency test is rooting out state policies that either discriminate against interstate commerce or result in double taxation,” id., para. 17, the court concluded that the FIT did neither. It observed that if every state adopted the FIT, each would tax only the portion of equity capital apportioned to it, with all apportionment percentages totaling 100 percent. And because in-state banks and out-of-state banks with the same amount of Ohio equity capital pay the same amount of Ohio tax, the court concluded that the FIT was nondiscriminatory.
Dollar Bank’s higher aggregate tax burden relative to that of a hypothetical, purely intrastate business did not change the court’s analysis. The court rejected the bank’s comparison of aggregate tax burdens, stating that the U.S. Supreme Court had never applied the internal consistency test in that manner. The disparity Dollar Bank had identified was attributable to the FIT’s regressive rate structure, a scheme that, as the court put it, “simply favors banks that do more business in Ohio.” Id., para. 33. According to the court, because any regressive tax structure could produce such a disparity, “[t]o accept Dollar Bank’s argument would require us to conclude that the Commerce Clause forbids all regressive tax structures,” which the court declined to do. Id., para. 35.
The case is Dollar Bank, FSB v. Harris, Slip Op. No. 2026-Ohio-3069 (Ohio Aug. 13, 2026), which is available at www.supremecourt.ohio.gov/rod/docs/pdf/0/2026/2026-Ohio-3069.pdf