COLUMBUS, Ohio (WCMH) — As the early debates on the state budget materialize, Ohio lawmakers will likely consider several tax proposals geared toward parents.
Gov. DeWine’s proposal
Nestled within the state budget are a number of proposed policies that Gov. Mike DeWine said during his State of the State remarks in January seek to “ease the financial burden on new parents.”
DeWine pushed for state legislators to pass a $2,500 state tax deduction for parents, and also eliminate state sales tax on what he described as “critical infant supplies” — including diapers, wipes, cribs, car seats, and strollers, among other items.
Although the policies sound alike, Ohio policy researchers said the proposed child tax deduction would not look or feel like the 2021 expanded federal child tax credit. That credit, which was within the American Rescue Plan and lapsed in December 2021, brought families between $250 and $300 per child per month, according to the Biden administration.
What is the difference?
Deductions reduce taxable income, while credits either lower how much someone owes in taxes or increase their tax refund.
For a family with one child earning $75,000, the deduction DeWine described would yield a family about $80 in reduced tax liability over a year’s time, according to Ohio State University associate professor and researcher Lauren Jones.
“The value of the credit is really a dollar-for-dollar value,” Jones said. “So when you say you have a $2,000 credit, it’s a $2,000 value to many families. The deduction is going to be a lot smaller in value to most families.”
Jones, who researches policies related to child and family wellbeing and recently signed on to a letter advocating for a reinstated expanded child tax credit, characterized DeWine’s proposals as “great but relatively small” efforts at assisting low-income parents.
“The legislative and political will that it takes to get something like this passed, it might be more sensible to focus immediately on passing something that has a little more bite,” Jones said.
Families making under $26,000 would not benefit from the proposed deduction, something Policy Matters took issue with, too. The left-leaning think tank has advocated for its version of a child state tax credit that includes a $700-per-child refundable credit.
“On the other hand, what DeWine has proposed,” research fellow Guillermo Bervejillo said, “it leaves a lot of people out in the weather when they need it most.”
Greg Lawson, a research fellow at the right-leaning think tank The Buckeye Institute, said he also has some concerns — particularly as it pertains to more generalized legislative efforts at tax reform, including on Ohio’s income tax.
“Lawmakers are really going to have to think about what they want to prioritize,” Lawson said. “If you are going to do some of those things the governor was talking about, it’s going to reduce your ability in some ways to do the bigger, bolder tax reform that you might want to do.”
Bill in the works
Amid the early months of negotiations on the state budget, Rep. Casey Weinstein (D-Hudson) is also in the process of drafting legislation to create a state-level child tax credit. A spokesperson said in an email that Weinstein was looking forward to sharing more details soon.
Twelve states have state-level child tax credits, nine of which are refundable, according to the National Conference of State Legislatures.
In the last five years or so, some states have also expanded their earned income tax credits or made them refundable, according to Jones. Ohio’s is not, but moving it to be refundable would be a “huge, huge boon,” she said.
The budget is in the early stages of hearings in the Ohio House and has to be signed by the governor no later than June 30.