Credits and breaks for Ohio families: exemptions, a nonrefundable EITC, the 529 deduction

A family coming to Ohio from a state with a refundable earned income credit should reset its expectations. Ohio’s EITC is 30% of the federal credit, but it is nonrefundable: it reduces Ohio tax to zero and then stops. Since a family of four pays no Ohio tax until Ohio AGI passes about $35,000, and the federal EITC is largest for families earning $20,000 to $30,000, the Ohio credit is worth nothing to the people the federal credit is built for. There is no Ohio child tax credit; the governor proposed a $1,000 one in 2025 and the legislature dropped it. What Ohio gives families instead is an exemption of $2,400 per dependent at lower incomes ($2,150 or $1,900 higher up), a $20 exemption credit per person under $30,000, a child care credit for families under $40,000, a $4,000-a-year deduction for 529 contributions, and credits of $250 to $1,500 for homeschooling, nonchartered private school tuition and scholarship gifts. None of it is large, and all of it is claimed on the same Schedule of Credits where the order of the lines decides what survives.

The other half of the family picture is local. Cities tax wages from the first dollar with no exemption for children, and about 210 school districts tax Ohio income on a second return where the EITC and the child care credit do not apply. For a working parent in Columbus or Cleveland, the 2.5% city tax is the largest state-or-local income tax on the return, and the Ohio refund is the smallest.

Dependents on the Ohio return

Ohio uses the federal definition of a dependent. Each one listed on the Schedule of Dependents earns a personal exemption, graded by the household’s Ohio modified AGI: $2,400 at $40,000 or less, $2,150 from $40,001 to $80,000, $1,900 above that, and nothing at $500,000 or more (2025 amounts, frozen for 2026; the 2026 instructions are to come). The exemption is worth 2.75% of itself to a family above the zero bracket, so $52 to $66 per child depending on the tier. A child with a summer job who files her own IT 1040 gets a $0 exemption on it if her parents can claim her. There is no Ohio head-of-household filing status as such; Ohio takes the federal status, and a head of household gets exactly the same $26,050 zero bracket as a single filer or a married couple, because Ohio has one table for everyone.

Families with modified AGI less exemptions under $30,000 also get the exemption credit, $20 for every exemption on the return, so $80 for a family of four. It comes off before the EITC does, which matters, as the example below shows.

The earned income credit

The Ohio EITC is 30% of the federal credit, claimed on the Schedule of Credits, and nonrefundable. It is taken after the retirement, senior, child care, displaced worker, exemption and joint filing credits, so by the time the return reaches it, a low-income family often has no tax left for it to offset. A single parent of two earning $36,000 with a federal EITC of about $4,000 has an Ohio EITC of $1,200 on paper; the example below shows how much of it she keeps. Who qualifies follows the federal rules exactly: if you have a federal EITC, you have an Ohio one. Ohio adds nothing for younger childless workers or ITIN filers the way a few states do.

The child and dependent care credit

Ohio’s child care credit is a percentage of the federal child and dependent care credit, and only for families with Ohio modified AGI under $40,000: 100% of the federal credit when modified AGI is under $20,000, 25% from $20,000 to $39,999, nothing at $40,000 and above. It requires that the federal credit was actually claimed, so a family whose federal credit was zero because they owed no federal tax gets no Ohio credit either; both are nonrefundable. The federal credit grew for 2026, with a top rate of 50% for the lowest incomes, and the Ohio credit follows it up automatically, but the $40,000 line has not moved in many years and keeps most two-earner families out.

Saving for college: the 529 deduction

Contributions to Ohio’s CollegeAdvantage 529 plan, and to a STABLE account for a person with a disability, are deducted on the Ohio Schedule of Adjustments up to $4,000 per beneficiary per year. The limit is per child, not per contributor, and a married couple shares one $4,000 per child rather than getting $8,000. Anything over the limit carries forward to later years with no expiration, so a grandparent’s $20,000 gift to one grandchild’s account is deducted $4,000 a year for five years, and a family with three children can deduct $12,000 a year. Out-of-state plans do not qualify; rolling an out-of-state plan into CollegeAdvantage does. The deduction is above the exemption line, so it also lowers the modified AGI that sets the exemption tier and the credit cutoffs. A family at $41,000 of Ohio AGI that puts $1,500 into a 529 drops to $39,500, moves from the $2,150 exemption tier to $2,400, keeps the child care credit, and saves more than the 2.75% suggests. Withdrawals for qualified expenses are tax-free; a nonqualified withdrawal of money that was deducted is added back.

School credits

The homeschool credit became per student rather than per return beginning in 2025, so three homeschooled children with $1,000 of materials earn $750. The tuition credit is for nonchartered schools, which are a specific category of mostly religious schools that have not sought a state charter; tuition at a chartered private school earns nothing. The scholarship donation credit is the one Ohio credit anyone with tax due can create at will, up to the day the return is due, and it is a dollar-for-dollar credit, not a deduction.

What Ohio does not have

• No child tax credit. The $1,000 proposal in the 2025 budget did not survive.
• No refundable EITC, and no refundable credit of any kind for a wage-earning family.
• No adoption credit for adoptions finalized after 2022; Ohio pays an adoption grant instead, and the grant is deductible from Ohio income.
• No K-12 expense credit for ordinary public or chartered private school costs, and no deduction for private school tuition.
• No renter’s credit, no property tax credit on the income tax return, and no circuit breaker. Homeowners get the owner-occupancy credit on the property tax bill through the county auditor, 5.70% of certain levies for 2026.
• No deduction for child support paid, and no tax on child support received, following federal law.

Two earners, one zero bracket

Ohio has no joint brackets. A married couple gets one $26,050 zero bracket, the same as a single person, and each spouse’s employer withholds as if that paycheck were the whole household’s income. Two $45,000 earners each have about $19,000 withheld on as if it were taxed at 2.75% after a full zero bracket; on the joint return, $90,000 less exemptions runs through one zero bracket, and the second spouse’s $26,050 of “free” income turns out to be taxed. The joint filing credit, 5% to 20% of tax up to $650, exists to soften this, and it is why Ohio has it at all: it is a marriage penalty offset. The percentage depends on modified AGI less exemptions: 20% up to $25,000, 15% to $50,000, 10% to $75,000, 5% above, and each spouse needs at least $500 of qualifying income. For 2026 the credit is gone entirely at $500,000 of modified AGI. A two-earner couple at $90,000 who owed $500 on the 2025 Ohio return should not be surprised; adjusting Form IT 4 to withhold at a higher rate on one job is the fix.

The 2025 federal law and Ohio families

The expanded federal child tax credit, the larger standard deduction, the deductions for tips and overtime, the car-loan interest deduction and the new “Trump accounts” for children all came out of the July 2025 federal act. Ohio adopted that act into its code in March 2026 (Senate Bill 9), but because Ohio starts from federal AGI, the pieces that help a family on the federal return mostly do nothing here. The child tax credit is a credit, not an income adjustment, so Ohio never saw it and still does not. Tips and overtime are deducted below the AGI line federally and so remain fully taxed by Ohio, the city and the school district. What does flow through is anything above the line: contributions to a Trump account for a child, if they are excluded from AGI under the federal rules, and the expanded uses of 529 money for K-12 expenses and credentialing, since Ohio follows the federal definition of a qualified withdrawal. The Department has not yet published a 2026 conformity statement; expect one with the 2026 instructions.