Creating a child care reimbursement account program, providing an income tax subtraction for certain contributions to a child care reimbursement account, and granting rule-making authority. (FE)
The creation of this program will necessitate amendments to existing statutes, specifically regarding income tax deductions for contributions made to child care reimbursement accounts. It sets forth rules under which funds may be contributed and withdrawn, placing limitative conditions on the use of these funds to ensure they are strictly for qualifying child care expenses. Furthermore, if funds contributed are not used within the calendar year, they will be forfeited, which may impact how parents plan their expenditures and savings for child care.
Senate Bill 426 proposes the establishment of a child care reimbursement account program administered by the Department of Financial Institutions. This program allows parents or legal guardians of qualifying children, defined as dependents under the age of 13, to create tax-advantaged accounts aimed at covering qualifying childcare expenses. Contributions to these accounts are limited to $10,000 per calendar year, and individuals contributing to these accounts can deduct contributions for state income tax purposes. The bill enables various contributors, with the account owner's permission, to assist in funding these accounts, broadening the support available to families.
Debate around SB426 may focus on concerns about access to care, potential inequities, and the management of the reimbursement program. Critics might argue that the forfeiture clause could penalize families who are unable to utilize the funds within a calendar year due to unexpected changes in circumstances. Additionally, there could be discussion about who the program vendor will be, their fee structures, and concerns about the governance of these accounts. The effectiveness of the program in actually addressing the childcare needs of families in the state will also be a significant point of contention.