PA Expands Its Child Care Tax Credit

Families can receive more as part of the child care tax credit.

By Kim Lyons | Pennsylvania Capital-Star

File photo.

An expansion of Pennsylvania’s child care tax credit signed into law by Gov. Josh Shapiro after passing the Legislature last week will increase the amount families with children in child care can receive. 

The expansion allows individuals to claim 100% of the federal child care tax credit they claimed.

“Childcare costs have continued to increase for Pennsylvanians and for working families across this commonwealth,” state Rep. Jordan Harris (D-Philadelphia) said at a press conference Tuesday to highlight the credit. “We also understand that childcare is workforce development, and that families are not able to enter the workforce unless they have reliable and affordable childcare.”

A family making $43,000 or less will see their maximum state credit increase from $315 to $1,050 for one child, and from $630 to $2,100 for two children, Harris noted. Pennsylvanians earning more than $43,000 will see their maximum tax credit increase from $180 to $600 for one child, and from $360 to $1,200 for two children. 

Harris said he often hears from constituents who don’t qualify for programs that could help them because their income puts them just over the threshold to qualify. “But this benefits everyone because it’s on a sliding scale,” he added. 

Diane Barber, executive director of the nonprofit Pennsylvania Child Care Association (PACCA), lauded the new credit as a great benefit for families to help defray child care costs. But, she cautioned, it doesn’t get at the underlying child care shortage, or help centers attract new workers.

“It’s a good thing … if you’re a family that has childcare. The supply problem hasn’t changed, and the demand problem has increased,” Barber said. “So for working families that already have a place, this is a wonderful opportunity to reduce some of their costs.”

According to a statewide survey of PACCA’s members, the demand for child care far outstrips the available space in child care centers, Barber said. Of the 726 child care providers who participated in the survey, there are a total of 2,395 open jobs, and a combined waiting list of 27,572 children waiting to get into their programs (she noted that number might include children who are on multiple child care providers’ waiting lists).

“So while this tax credit is wonderful for families who have care, it’s not doing anything for families who need to find care,” Barber said. “And it’s not really helping childcare providers pay their staff more so they can get people in the door and working in the classrooms.”

The state Department of Revenue has more information on how to apply for the child care tax credit.

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