Pennsylvania’s new state child tax credit program, modeled after the federal program, is designed to support Pennsylvania’s working families and help ensure unbarred access to high-quality early childhood education. In his capstone budget, Gov. Wolf secured $25 million for the Child and Dependent Care Enhancement Program. Modeled after the federal child care tax credit program, this state-level child care tax credit program benefits working families with children in daycare who already qualify for the federal program. It’s estimated that nearly 221,000 Pennsylvania families will benefit from this refundable tax credit. The state child care tax credit is for 30% of the federally approved expense.
Pennsylvanians paying for child care services will be able to claim the credit when filing state taxes starting in 2023. Families could be eligible for:
- $180 (one child) or $360 (two or more children) for households earning above $43,000, or
- $315 (one child) or $630 (two or more children) for households earning less than $43,000.
With the average cost of childcare in Pennsylvania being nearly $12,000 annually, according to the Economic Policy Institute, it’s a growing burden for working families also struggling with rising inflation and gas prices.