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An expansion of Pennsylvania’s child care tax credit 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.

About the Child Care Tax Credit

The Child and Dependent Care Enhancement Tax Credit that is available to Pennsylvanians at the state level is based on the federal Child and Dependent Care Tax Credit. Taxpayers must receive the federal credit to also be eligible for the state credit in Pennsylvania. The major expansion signed into law by PA Governor Josh Shapiro means:

• The maximum credit will be $1,050 (one child) or $2,100 (two or more children).

• The credit cap phases down as income levels increase.

Prior to the expansion, the maximum credit Pennsylvania families could receive was up to $315 (one child) or $630 (two or more children). Under the new law, Pennsylvanians could see up to a 233% increase in their tax credit from last year.

For more information about the Childcare and Dependent Care Tax Credit, visit pa.gov/childcaretaxcredit.

Child Care Crisis Continues

The current child care crisis in Pennsylvania is a result of supply-side challenges resulting from
an underpaid child care workforce leaving the field for higher-paying jobs (average child care
teacher wage in PA is less than $12.50/hr.).

Without addressing supply-side solutions, such as teacher wages, programs will continue to
have closed classrooms and growing wait lists.

While the expansion of the child care tax credit is a solution for making child care more affordable for families, this investment, along with the other early childhood investments in the budget don’t solve the root cause of the child care crisis or do anything to increase access.

The tax credit – considered a demand-side solution – helps families with affording child care; however, it does not address supply-side issues such as closed classrooms and long waiting lists due to workforce shortages. Tax credits will not help families access child care if they remain on wait lists because there are not enough teachers to serve their children.

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