COLUMBUS, Ohio – Ohio families with young children could soon receive a $1,000 tax credit, a move proposed by Governor Mike DeWine to support low- and middle-income parents. However, the funding for this initiative may come at the expense of smokers, with the governor proposing a significant increase in cigarette taxes.

The proposed child tax credit aims to assist Ohio families as part of DeWine’s latest budget proposal. Speaking on the matter, the governor emphasized the importance of helping families thrive, especially those with children under the age of six.

“This will be a significant amount of money,” said DeWine during the release of the budget. “It will help these families, help these families move forward with their lives.”

Under the new proposal, Ohio residents would be eligible for a child tax credit based on their annual income and the number of children in their care. To qualify for the $1,000 credit, parents must meet the following criteria:

• Be the parent of a child aged six or younger.
• Have an income below $94,000 for married couples filing jointly.
• For single parents, the income threshold is $69,000, while married couples filing separately could earn up to $56,500 annually.

The credit would provide a refund if it exceeds the amount owed in state taxes, for families earning at least $22,500 annually. It would be phased out as income increases, with joint filers starting at $75,000, married filers separately at $37,500, and single filers at $50,000.

Funding the Credit
The proposed credit would come at an estimated cost of $450 million in the 2026 fiscal year, with the following year’s total slightly lower at $440 million. To fund this initiative, DeWine is suggesting an increase in the state’s cigarette taxes, from $1.60 per pack to $3.10. In addition, the governor proposed a sharp rise in wholesale tobacco taxes from 17% to 42%.

Together, these changes would generate about $1.1 billion annually for the state, according to Ohio’s Office of Budget and Management, marking a 58% increase over projected 2025 revenues. However, this increase in tobacco taxes would likely affect lower-income individuals, as many smokers belong to this demographic.

For example, the increased cigarette tax would add an additional $547.50 to the annual cost of a pack-a-day smoker. State Budget Director Kim Murnieks pointed out that the rise in tobacco taxes aligns with the governor’s broader goal of encouraging Ohioans to quit smoking, which is responsible for over $6 billion in healthcare costs to the state each year.

Challenges and Opposition
Despite its potential benefits for families, DeWine’s proposed tax credit may face significant opposition in the state legislature. Although the governor’s last attempt to raise the child tax deduction was dropped by lawmakers, it remains to be seen whether this new proposal will meet the same fate.

One key concern is the funding mechanism: critics argue that increasing “sin taxes” on tobacco disproportionately affects lower-income communities. The use of cigarette taxes to fund the tax credit has raised concerns, particularly among Democrats, who are wary of policies that may place a heavier burden on vulnerable populations.

Nonetheless, some lawmakers, such as Democratic State Rep. Dani Isaacsohn, expressed support for the credit, while acknowledging the complexity of how to fund it. “I’m encouraged that the governor’s budget includes such a meaningful commitment,” Isaacsohn said. However, the debate on how to finance the proposal remains ongoing, with no clear outcome in sight.

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