Three states in Midwest expanding their earned income tax credits

Low-income workers in Ohio will get additional tax relief as the result of changes made in June to the state’s biennial budget. Following last year’s creation of an earned income tax credit, the legislature chose to expand it — from 5 percent of the federal credit to 10 percent.
Nearly every state in the Midwest now has some type of EITC in place. It generally is some percentage of the federal credit for lower-wage workers. Ohio is the region’s only state with a nonrefundable EITC: individuals don’t receive cash refunds if the credit exceeds their tax liability. The refundable EITCs in other Midwestern states are as follows: 10 percent in Illinois and Nebraska; 9 percent in Indiana; and 17 percent in Kansas. In Iowa, the credit rose to 15 percent this tax year as the result of 2013 legislation.
Earlier this year, Minnesota lawmakers increased their state’s unique Working Family Tax Credit and expanded it to more families. According to the Center on Budget and Policy Priorities, Minnesota’s credit currently averages to about 33 percent of the federal EITC. The benefit varies from household to household based on factors such as income levels and household size. Wisconsin’s EITC is only extended to families with children. It is 4 percent of the federal credit for one child, 11 percent for two children, and 34 percent for three children.
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Midwest