What to know about the new PA child care tax credit




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Governor Tom Wolf has approved a new permanent child care tax credit that will allow families to claim thousands of dollars in benefits.

The new tax credit was created as part of Pennsylvania’s new $45.2 billion budgetwhich Wolf signed in early July.

Wolf and lawmakers also allocated more than $140 million for a one-time expansion of a property tax credit for low-income and older Pennsylvanians. Here’s what you need to know about these credits and how to access them:

The Pennsylvania Child Care Tax Credit

What does it do? Modeled on the federal child tax credit, the Child and Dependent Care Enhancement Program will reimburse up to 30% of child care expenses that filers claim on their federal return. This program aims to support working families by reducing their tax liability. A total of $24.6 million was invested in the program, which is now part of the state’s tax code.

Who is eligible? People who have one or more dependents and are below a certain income level are eligible. For persons caring for a dependant, the expenses claimed cannot exceed $3,000. For those with two or more dependents, it cannot exceed $6,000.

The percentage of expenses that can be credited will vary depending on income level, but this detail has not yet been determined. According to a representative of the state House budget committee, the rules will be similar to those for federal filings.

Married couples with an annual income of up to $150,000 or a single filer who earned half of that were eligible for the full amount of the federal tax credit in 2021.

How is it claimed? This credit can be claimed when filing state taxes beginning in 2023. The refund will be subtracted from the total amount of taxes owed to the state. If the amount credited is worth more than the amount of taxes owed to the state, the rebate will be refunded to the filer.

The (temporary) boost to the property tax refund

What does it do? This one-time benefit temporarily bolsters the state’s property tax/rent rebate program.

Under the current program, eligible Pennsylvanians receive rebates ranging from $650 to $975 depending on whether the filer is a renter or homeowner.

This year’s budget uses $140 million in federal stimulus funds to increase payments by 70% for one year. If a person has already received $975 from the program last year, they will receive an additional $682.50.

Who is eligible? The program benefits Pennsylvanians 65 or older, widows over 49, and people with disabilities 18 and older. Homeowners with an annual income of less than $35,000 are eligible, as are renters with an annual income of less than $15,000 (certain types of income are excluded).

How is it claimed? Anyone who received a property or rent tax rebate during the 2021 tax season is automatically eligible for the additional rebate. A person can apply to discount program on the State Department of Revenue’s website for next year’s tax season, although they don’t get the extra money.

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