Ohio must help its future thrive. To help families thrive, there must be investments in the future generations of the state that will grow to become leaders of tomorrow. A child tax credit (CTC) would be beneficial to support families by providing tax relief, reducing poverty, and creating an environment for children to grow into productive adults and part of the workforce.
Language supporting the Ohio child tax credit in HB 96 was removed in the House-passed version of the budget, and we ask that you reinstate the child tax credit in the budget. Doing so will play a crucial role in helping Ohio families thrive economically. There is substantive evidence of the positive impact of the federal child tax credit, which was temporarily expanded with impressive results.
The CTC enhancements enabled families to keep more of their earnings, rather than paying it to the government in income tax. Data collected by the U.S. Census Bureau at the time showed the families used the additional resources effectively. In August 2021, among Ohioans who received a CTC payment, 77 percent purchased food, 62 percent purchased clothing, most likely supporting back-to-school, and 41 percent paid for utilities. National studies4 showed that families who received CTC in 2021 did not reduce their employment. The extra resources were enough to cover some expenses, pay down debt, or save for education, but not enough to cause working parents to stay home.
The federal CTC enhancements expired at the end of 2021, and several states, recognizing an efficient model which encourages parents to remain in the workforce, enacted their own state level child tax credits. If Ohio were to adopt the tax credit, it joins 16 other states across the country.
The phased-in framework of the proposed tax credit effectively incentivizes work. Too often, Ohioans must choose between accepting higher pay with the risk of losing benefits or needed access to programs. This tax credit offsets some of the potential loss of other public benefits, enabling families to utilize more of their earnings rather than having to pay them in income taxes. Phasing the tax credit out gradually provides an offramp, allowing families to meet eligibility and continue to enhance their earnings and careers. The refundability of the credit allows it to be targeted to those families most in need.
