Child and Dependent Care Tax Credit expanded across PA

18 December 2023- Secretary of Revenue Pat Browne applauded legislation signed last week by Governor Josh Shapiro that expands Pennsylvania’s Child and Dependent Care Enhancement Tax Credit. The expansion of this credit will be a major help to working families with children in daycare and other people in the Commonwealth who are caring for a family member.

“We know from the tax returns that we have received this year that the Child and Dependent Care Enhancement Tax Credit delivered critical relief to roughly 210,000 families in Pennsylvania,” Secretary Browne said. “Research has shown that a similar tax credit on the federal level significantly reduced childhood poverty, addressed food insecurity, and helped many families secure their finances. It was the right decision to expand our Pennsylvania credit to take another step toward making our Commonwealth a better place to live and raise a family.”

For more information on the Child and Dependent Care Enhancement Tax Credit, Pennsylvanians can go to http://www.pa.gov/childcaretaxcredit.

Who Qualifies & How Much is Available?

The Child and Dependent Care Enhancement Tax Credit that is available to Pennsylvanians is based on the federal Child and Dependent Care Tax Credit. That means that taxpayers must receive the federal credit to also be eligible for the state credit in Pennsylvania. Under the legislation signed this week by Governor Shapiro, the state credit is now equal to 100 percent of the federal credit, meaning: 

  • 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.
  • The minimum credit will be $600 (one child) or $1,200 (two or more children).

In order to claim the credit on your PA Personal Income Tax Return (PA-40), you must have incurred care expenses for:

  • A dependent child under age 13.
  • A spouse who was physically or mentally incapable of self-care and lived with you for more than half the year.
  • An individual who was physically or mentally incapable of self-care, lived with you for more than half the year, and either:
    • Was your dependent; or
    • Could have been your dependent, except that he or she received gross income of $4,400 or more, filed a joint return, or could have been claimed as a dependent on another taxpayer’s return.

The credit is refundable, meaning qualified taxpayers will earn the full amount of the credit in a refund, after accounting for any tax obligation due.