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HB 903

Make the earned income tax credit partially refundable

136th Legislature (2025-2026) Introduced by Sean Brennan and 8 co-sponsors

Ohio's EITC becomes partially refundable (30% nonrefundable, 10% refundable of the federal EITC) and must be claimed in a new prescribed order with many other credits.

Referred to committee
#taxation
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WeVote Research Nonpartisan
Bill Summary · HB 903

Overview

HB 903 (136th General Assembly, Ohio) proposes to modify the Ohio earned income tax credit (EITC) by making a portion of it refundable. The bill amends sections 5747.71 and 5747.98 of the Revised Code and sets a specific order for claiming multiple credits. It applies to taxable years ending on or after the act’s effective date.

Main purpose and intent

  • Change the Ohio earned income tax credit from fully nonrefundable to partially refundable.
  • Establish a structured ordering system for claiming multiple tax credits against a taxpayer’s liability.

Key provisions and changes

  • Earned Income Credit (Section 5747.71)

    • Definition: “Eligible individual” follows the same meaning as in the Internal Revenue Code (IRC) Section 32.
    • Nonrefundable portion: A credit against Ohio tax liability equals 30% of the taxpayer’s federal earned income credit (federal EITC) for the taxable year, limited to the taxpayer’s Ohio tax liability after subtracting preceding nonrefundable credits as determined by the ordering rules.
    • Refundable portion: A separate refundable credit equal to 10% of the federal EITC amount for the taxable year. If this refundable portion exceeds the remaining tax liability after earlier credits, the excess is refunded to the taxpayer.
    • Claim order: The nonrefundable and refundable EITC must be claimed in the order specified by Section 5747.98.

  • Credit ordering and other credits (Section 5747.98)

    • Establishes a comprehensive order for applying credits to compute aggregate Ohio tax liability. The order lists numerous credits (retirement, senior citizen, dependent care, education, job training, personal exemptions, joint filing, nonrefundable EITCs including the nonrefundable EITC under section 5747.71, and many other credits) and requires taxpayers to apply credits in this prescribed sequence.
    • For most credits (except refundable credits and a few specific exceptions), the available credit cannot reduce tax liability below zero; any excess may be carried forward where the statute allows.
    • The section reinforces that a taxpayer cannot claim a credit more than once per tax year.

  • Effective date

    • The amendment applies to taxable years ending on or after the act’s effective date.

Who and what is affected

  • Taxpayers in Ohio who qualify as “eligible individuals” for the federal EITC will be eligible for a partially refundable state EITC (30% nonrefundable, 10% refundable of the federal EITC amount).
  • The overall credit landscape in Ohio will be affected since the EITC interacts with a long list of other credits, all of which must be claimed in a specified order.
  • Taxpayers claimants with multiple credits will need to follow the new ordering rules (5747.98) when calculating a net Ohio tax liability.

Procedural and timeline considerations

  • Tax liability calculation must follow the prescribed order of credits, as detailed in Section 5747.98.
  • The refundable portion of the EITC is paid to the taxpayer if it exceeds remaining tax due after prior credits.
  • The bill repeals existing sections 5747.71 and 5747.98 and replaces them with the revised versions; the changes take effect for taxable years ending on or after the act’s effective date.

Potential impacts and considerations

  • Taxpayers eligible for the federal EITC could see a partially refundable state credit, potentially increasing the net benefit for low- to moderate-income households.
  • Administrative impact for taxpayers and tax preparers due to the new credit order and the blend of refundable and nonrefundable credits.
  • Fiscal impact on Ohio revenue depends on the uptake of the refundable portion and interaction with the broad set of credits listed in the ordering framework.

Compiled from official sources — confirm details with the bill’s official record.

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