Child and dependent care tax credit.
The proposed tax credit functions on a sliding scale based on income levels, offering more substantial benefits to those on the lower end of the income spectrum. Taxpayers can qualify for a credit ranging from $200 to $1,000 depending on their income relative to the federal poverty level, or they may receive 20% of their employment-related expenses, whichever is lower. This provision retroactively applies to the beginning of 2023, reflecting an immediate impact on the state tax structure and providing financial relief to eligible families as soon as tax filings are made.
Senate Bill 238, known as the Child and Dependent Care Tax Credit, establishes a new tax credit designed to alleviate the financial burden of child care for low-income families. The bill offers a refundable credit for taxpayers with an adjusted gross income that does not exceed 250% of the federal poverty level. This effectively aims to assist in covering the expenses related to child care, enabling parents to seek and maintain employment while ensuring their children's care needs are met.
The introduction of SB 238 has raised discussions regarding the effectiveness and sustainability of fiscal measures aimed at child care. While proponents advocate for the bill as necessary support for working families, critics question the long-term implications on state revenue and whether such tax credits adequately address the broader issues surrounding child care accessibility and affordability. Notably, there is an ongoing debate about the potential for overburdening the state’s fiscal budget while attempting to provide meaningful assistance to families in need.