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Policy Matters Ohio

An Ohio Earned Income Tax Credit: Costs and Benefits

March 10, 2003

An Ohio Earned Income Tax Credit: Costs and Benefits

March 10, 2003

The federal Earned Income Tax Credit provides a tax credit of up to $4204 to working families who earn less than $33,000.

The credit enjoys wide bipartisan support because of its proven record in helping to reduce poverty, reward work, provide tax relief, stimulate the economy and meet basic expenses for working families. The federal EITC lifted 4.8 million people above the federally defined poverty line in 2001, more than any other government program.

Seventeen states offer their own EITCs based on the federal credit. An Ohio EITC, set at 20 percent of the federal benefit amount, would provide an estimated 676,466 working families in Ohio with an average annual credit of $328 for an estimated total cost to the state of $222 million dollars for the Tax Year 2004. This is less than one percent of Ohio's projected General Revenue Fund expenditures for Fiscal Year 2004. As Ohio debates changes to its tax system, many of which would fall heavily on low- and middle-income families, this report outlines how incorporating a state EITC into the changes could provide relief to low- and moderate-income working families.

Every Ohio county has working families who claimed the federal EITC in 2000 and would qualify for a state EITC. In the average Ohio county, 12 percent of taxpayers filed for the federal credit.

To see how your county would be affected, click here

Policy Matters' research on tax fairness is supported by a generous grant from the Cleveland Foundation.

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