HARRISBURG, PA — Governor Josh Shapiro recently signed into law an expansion of the Childcare Tax Credit. This change is set to benefit nearly 210,000 Pennsylvania families, including an estimated 11,603 households in Chester County.
Previously, Pennsylvania matched only 30 percent of the federal Childcare Tax Credit. However, under this new bipartisan legislation, the state credit will now match the federal credit in full. This boost is a much-needed relief for families grappling with escalating childcare expenses, which have been exacerbated by inflation and the ongoing effects of the pandemic.
The Childcare Tax Credit at the state level is based on the federal Child and Dependent Care Tax Credit. To be eligible for the state credit, taxpayers must receive the federal credit. The recent expansion means that the maximum credit for those with one child will be $1,050, and for those with two or more children, it will be $2,100. The minimum credit has also increased to $600 for one child and $1,200 for two or more children.
Before Governor Shapiro’s legislative intervention, Pennsylvania families could receive a maximum credit of merely $315 for one child or $630 for two or more children. This new legislation marks a potential increase of up to 233% in their tax credit from last year, a considerable financial uplift for struggling families.
This expansion’s importance cannot be overstated. Childcare costs have risen dramatically over the years, outpacing income growth and making it increasingly difficult for families to afford quality care. By matching the federal Childcare Tax Credit fully, Pennsylvania is essentially doubling down on its commitment to support families and ensure that access to quality childcare isn’t compromised due to financial constraints.
Moreover, this policy change could have broader economic implications. By easing the financial burden of childcare, it could enable more parents, particularly women, to participate in the workforce, thereby potentially bolstering the state’s economy.
This expansion also underscores the importance of bipartisan cooperation in addressing issues that affect everyday Pennsylvanians. The fact that lawmakers from both sides of the aisle came together to pass this legislation shows a shared commitment to improving the lives of Pennsylvania’s families.
Governor Shapiro’s signing of this expanded Childcare Tax Credit is a significant step toward easing the financial strain of childcare for thousands of Pennsylvania families. As these families begin to see the benefits of this increased tax credit, it’s clear that this move is not just about numbers—it’s about making a tangible difference in the lives of Pennsylvanians and their children.
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