Transportation Budget Could Include Change To Low-Income Tax Credit

Mar 28, 2019

As lawmakers are working out differences in their transportation budgets, there’s one thing in the Senate’s version that doesn’t seem to have anything to do with transportation: a change in a tax credit designed for low-income people. It’s being tied to the increase in the gas tax.

The Senate transportation budget removes the income cap on the state’s earned income tax credit, boosting it from 10 percent of the payer’s federal tax credit to 30 percent.

Senate President Larry Obhof (R-Medina) said it will save low-income taxpayers $38 million a year. He says it’s a fair offset to whatever gas tax increase is finally agreed on.

“If you’re at the very low end of the income range, that hurts you proportionally a lot more,” Obhof says. “So we wanted to provide additional relief to the people who needed it the most.”

The Ohio Senate version of the budget includes just a 6-cent gas tax increase, while the Ohio House passed a 10.7 cent hike. Gov. Mike DeWine urged lawmakers to pass an 18-cent increase to fund road construction projects.

Democrats have long wanted an earned income tax credit that would allow low-income taxpayers to pay no taxes but also get refunds. This plan would not make that credit refundable.

The progressive think tank Policy Matters Ohio said the Senate’s changes will benefit only an additional 1 percent of Ohioans.