OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 577 Bill Analysis
135th General Assembly
Click here for H.B. 577’s Fiscal Note
Version: As Introduced
Primary Sponsor: Rep. White
Effective date:
Kitty Sorah, Attorney
SUMMARY
 Establishes a refundable income tax credit for the eligible child care expenses of a
taxpayer with a dependent under the age of 13.
 Requires a taxpayer’s household income to be 750% or less of the federal poverty line to
qualify for the credit.
 Bases the amount of the credit on the modified adjusted gross income of the taxpayer’s
household.
 Limits the maximum credit amount annually to $3,000 for one child and $6,000 for two
or more children.
DETAILED ANALYSIS
Refundable child care expense tax credit
The bill establishes a personal income tax credit for the eligible child care expenses of a
taxpayer with a dependent under the age of 13. The credit is refundable and so will result in a
refund if the credit amount is greater than the amount of tax owed. The credit is available for
taxable years beginning on or after the bill’s 90-day effective date.1
To be eligible for the credit, a taxpayer’s household income, based on the modified
adjusted gross income (MAGI) of all members of the taxpayer’s household, must be equal to or
less than 750% of the federal poverty line (FPL) based on the taxpayer’s household size for the
taxable year. MAGI is Ohio adjusted gross income plus any income deducted pursuant to the
1 Section 3.
June 11, 2024
Office of Research and Drafting LSC Legislative Budget Office
existing business income deduction or capital gains deduction for the sale of a business.2 The
FPL for 2024 is $20,440 for a two-person household, with approximately $5,300 added for each
additional household member.3
The amount of the credit is determined by multiplying eligible child care expenses by
the applicable credit percentage, which is a sliding scale based on the household’s MAGI, as
described in the table below. Taxpayers with a household MAGI of 450% or less of the FPL are
eligible for the full amount of the credit. The maximum annual credit allowed is $3,000 for one
eligible child and $6,000 for two or more eligible children.4
Applicable credit percentage based on MAGI
FPL Credit percentage
At or below 450% 100%
451 to 500% 85%
501 to 550% 70%
551 to 600% 55%
601 to 650% 40%
651 to 700% 25%
701 to 750% 10%
Eligible child care expenses are any amount that would qualify as an employment-
related expense for purposes of the federal dependent care credit. These include expenses for
household services or the care of a qualifying child. To qualify, household services must be in
part for the wellbeing and protection of a qualifying child. Overnight camps are not eligible
expenses.5
2 See R.C. 5747.01(A)(28), (A)(34), and (II), not in the bill.
3 See HHS Poverty Guidelines for 2024, which may be accessed by conducting a keyword search for
“poverty guidelines” on the website of the U.S. Department of Health and Human Services:
aspe.hhs.gov.
4 R.C. 5747.74, 5747.08, and 5747.98.
5 26 United States Code 21(b)(2)(A); see also IRS Publication 503, which may be accessed by conducting
a keyword search for “publication 503” on the IRS’s website: www.irs.gov.
P a g e |2 H.B. 577
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
Example
Because several variables are at play when calculating the credit amount, it may help to
consider an example. Consider a taxpayer with a household of four that includes one 12-year-
old child. The household’s MAGI is $175,000, and the taxpayer spent $6,000 on eligible child
care expenses to care for the child. The 2024 FPL for a four-person household is $31,200, so the
taxpayer’s MAGI is about 561% of the FPL, which equates to a credit percentage of 55%. So the
taxpayer’s credit equals 55% of $5,000, which is $3,300. However, because the taxpayer only
has one qualifying child, the amount of the credit is limited to $3,000.
Interaction with existing credit
Continuing law authorizes a nonrefundable income tax credit for taxpayers with MAGI
of less than $40,000 equal to either 25% or, if MAGI is less than $20,000, 100% of the taxpayer’s
federal dependent care credit for the taxable year. The bill’s dependent care credit cannot be
claimed on the basis of the same child care expenses that form the basis of this existing,
nonrefundable credit.6
HISTORY
Action Date
Introduced 05-15-24
ANHB0577IN-135/ks
6 R.C. 5747.054, not in the bill, and R.C. 5747.74(D).
P a g e |3 H.B. 577
As Introduced


Statutes affected:
As Introduced: 5747.08, 5747.98