Senate President Pro Tem Chris Widener, a Springfield Republican, introduced the legislation.
According to the measure, an Ohio resident making $40,000 per year would see a cut of about $38 under 2014 individual income tax rates.
Ohio Senate GOP spokesman John McClelland said the proposal reflects projected savings from reduced hospital payments and many state prisoners now qualify for Medicaid.
McClelland told The Northeast Ohio Media Group the state will collect in additional sales-tax revenue and additional federal reimbursements for some previously ineligible enrollees.
The left-leaning Policy Matters Ohio said such a tax cut would mostly go to affluent Ohioans while other needs are left unmet.