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Government & Politics

Change In Tax Credit Is Tied to the Proposed Gas Tax Increase

a photo of gas pumps
The Senate transportation budget includes a tax credit change, which is linked to the proposed gas tax hike.

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 and boosts it from 10 percent of the taxpayer’s federal tax credit to 30 percent. Republican Senate President Larry Obhof says will save low-income taxpayers $38 million a year. He’s 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," he said. "So we wanted to provide additional relief to the people who needed it the most.”

Democrats have long wanted an earned income tax credit that would allow low-income taxpayers to pay no taxes but also get refunds. This wouldn’t make that credit refundable, and the progressive think tank Policy Matters Ohio says the Senate’s changes will benefit only an additional 1 percent of Ohioans.