This morning, Scioto Analysis released a memo presenting an analysis of the impact of the child tax credit in Ohio’s proposed FY 2026-2027 budget. As currently constructed, we estimate the Child Tax Credit would provide nearly $450 million in direct benefits to Ohio families. These direct benefits primarily accrue in low- and middle-income families, but the indirect impacts this may have on Ohio’s economy would be beneficial to nonrecipients as well.
“There is a robust body of research that shows how investments made in early childhood are beneficial both to the families who receive them and the broader community” said Scioto Analysis Principal Rob Moore. “Children who grow up with access to more resources have an easier time in the short term, which often translates to better wage, health, and criminal justice system involvement outcomes later in life.”
Children who have more resources in formative years tend to have higher wages, better health, and less criminal justice system involvement. Using previous literature on the relationship between tax credits and outcomes for households, we estimate the current proposal will lead to the following annual impacts:
$740 million in net benefits for the Ohio economy
$450 million in direct credits to qualifying Ohio families.
$500 million in higher future earnings for children receiving the credit
$190 million in reduced costs associated with future crime
The report draws from research conducted by the Columbia University Center on Poverty and Social Policy, indicating that financial support for families with children leads to better health outcomes, higher educational attainment, and lower crime rates. This study was awarded the 2023 award for “Best Original Article” in the Journal of Benefit-Cost Analysis due to its methodological rigor and policy relevance.
While raising revenue to fund this credit will exact a cost on the economy due to foregone tax revenue, the potential long-term gains for Ohio’s economy and communities are substantial. After running 10,000 simulations of the proposed child tax credit under different circumstances, we found the benefits of the child tax credit outweigh its costs in 90% of those simulations.
“Investing in Ohio children is a good bet for growing Ohio’s economy in the long run,” said Scioto Analysis Principal Rob Moore.