Pennsylvania Legislature Passes Bill to Triple Child and Dependent Care Tax Credit

Pennsylvania state capitolCredit: Commonwealth Media Services

PENNSYLVANIA — State Representative Melissa Shusterman, a Democrat from Chester County, has co-sponsored a major legislative victory for working families in Pennsylvania. House Bill 1259, which Shusterman co-prime sponsored, significantly expands the state’s Child and Dependent Care Enhancement Tax Credit. The legislation was included in the state Fiscal Code, passed by the legislature and signed into law as Act 34 of 2023 by Governor Josh Shapiro.

The new law expands the Child and Dependent Care Enhancement Tax Credit by substantially increasing the percentage that taxpayers can claim on their 2023 state tax return. This expansion is set to provide much-needed relief to families struggling with the high cost of child and dependent care.

Quality childcare in the Commonwealth averages over $12,000 per child annually, and costs can be even higher in many parts of the state. “Employers need workers, and working families need affordable child care,” said Shusterman, who has been a staunch advocate for the tax credit. She applauded the Chester County Chamber of Business and Industry’s President & CEO, Laura Manion, who championed the cause for 2023.

Manion expressed her gratitude to Shusterman and other General Assembly members for ensuring the inclusion of the Childcare and Dependent Care Tax Credit in the budget code bills. She stated that the lack of accessible and affordable child care impedes employers’ ability to hire workers, a sentiment echoed by local chambers across the Commonwealth.

The expanded tax credit will allow Pennsylvania families to claim a 100% match to the federal tax credit when they file their federal and state tax returns. This expansion means that nearly a quarter-million of Pennsylvania’s working families will see their state tax credit for child care and dependent care more than triple.

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For one child, the current credit of $180 could increase to as much as $1,050, depending on household income and expenses. For families with two or more children, the current credit of $360 could increase to as much as $2,100.

The expansion of the tax credit helps ease one of the biggest burdens on working families – child care expenses. It also provides vital support for dependent care expenses, ensuring that family members who cannot care for themselves have safe and reliable care.

In concluding her remarks, Shusterman highlighted the far-reaching benefits of the tax credit expansion. “Prioritizing access to affordable child and dependent care is a win for families, a win for our workforce, a win for businesses, and a win for our economy,” she said.

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