THE PENNSYLVANIA CHILD CARE TAX CREDIT

The recently passed state budget includes the creation of a child care tax credit.

What is it?

The Child and Dependent Care Enhancement Program will allow parents and guardians to claim 30% of their child care expenses when filing their state tax returns beginning in 2023. Nearly $25 million went into the program, which is now a permanent fixture of the state’s tax code.

What does it do?

The tax credit would be equal to 30% of the taxpayer’s child care expenses, up to $3,000 for one dependent or $6,000 for two or more dependents, multiplied by 35%. That means the maximum amount of credit that a taxpayer could receive is $315 for one dependent and $630 for two or more dependents.

Who is eligible?

People who have one or more dependents and fall under a certain income level will be eligible for the full credit. Families earning less than $43,000 will be eligible for the full credit. Families earning more than $43,000 will be eligible to receive $180 for one child or $360 for two or more dependents.

How is it claimed?

This credit can be claimed when filing state taxes beginning in 2023. The rebate will be subtracted from the total amount of taxes owed to the state. If the amount credited is worth more than the amount of taxes owed to the state, the rebate will be refunded to the filer.