This story originally appeared on Spotlight PA.
For many families, child care in Pennsylvania is unaffordable and hard to access. It’s also rough on workers in the industry who receive low pay and don’t often remain in jobs.
The situation has gotten so bad that business groups from across Pennsylvania recently implored lawmakers to intervene, arguing that “virtually all economic sectors” are affected by the shortage. Working parents can’t find child care so employers can’t fill open positions.
Pennsylvania lawmakers’ solution to this problem has typically been tax credits, which lower the amount of money a resident owes the state’s Department of Revenue.
Last December, lawmakers agreed to expand Pennsylvania’s child and dependent tax credit. As a result, families got a bump in the amount they could claim for child care costs on their 2023 tax returns.
And the recent state budget includes a tax credit for Pennsylvania businesses that contribute to their employees’ child care expenses.
However, local chambers of commerce say that tax credits fail to address the structural issues that plague the child care industry — namely, a serious provider shortage driven by low wages. They’re not the only ones to identify this issue and push for solutions.
How helpful is the expanded child and dependent tax credit?
The tax credit provides up to $1,050 for one child, age 12 or younger, or $2,100 for two or more kids. In comparison, on the 2022 state tax return, a parent could only get up to $315 for one child, and $630 for two or more.
The Pennsylvania Department of Revenue says that for tax year 2023, 212,674 people claimed the Child and Dependent Care Enhancement Tax Credit on their Pennsylvania personal income tax return.
How much does $1,050 cover when it comes to child care?
The average cost of center-based child care for toddlers in Pennsylvania is $11,346, annually, according to a 2023 report from the Annie E. Casey Foundation, a youth advocacy charity.
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