Pennsylvania Democrats are expanding tax credits for families

As the single mom of a 6-year-old son with special needs, Tori Snyder is well-versed in the extreme juggling act conducted by countless parents across the country.

She knows what it is to have a million balls up in the air. For Snyder, who lives half an hour outside of Pittsburgh, that includes a full-time job in economic development, a son she needed to pull from his after-school care program because it was too expensive, a mother who now looks after her child when Snyder is at work, the need to find the ever-elusive babysitter, and likely the need to use paid time off to be with her son, who is on the autism spectrum, this coming summer.

This, Snyder knows, is a story being told by many throughout Pennsylvania and across the nation. It’s a story of stressful days and sleepless nights, of anxiety and worry and hoping that, someday, there will finally be enough money to afford the never-ending costs of parenting and caregiving.

But right now, parents are struggling, Snyder said. That, she explained, is why she was deeply relieved to hear that Democratic Gov. Josh Shapiro signed legislation on Dec. 13 that includes a significant expansion of the child and dependent care enhancement tax credit.

The expansion means Pennsylvania families spending money on care for children or other dependents, such as a spouse who needs day care, can receive hundreds more dollars every year in credits when they file taxes.

“I was really excited to see that the tax credit was going to be offered because it is something that will be beneficial to us in the long run,” said Snyder, a member of the national nonprofit Moms Rising, which has advocated for credit expansion and other legislation benefiting families. 

Prior to Shapiro’s signing of House Bill 1300, a fiscal code bill that releases hundreds of millions of dollars in funding allocated in the state budget to a variety of agencies and programs, Pennsylvania would match 30% of the federal child care tax credit. With the expansion championed by Shapiro and Democratic lawmakers, the state will now match 100% of the federal credit. Families earning $43,000 or less annually will be able to receive a maximum tax credit of $1,050 for one dependent, compared to the previous maximum credit of $315. For those earning more than $43,000, the maximum credit for one dependent will go from $180 to $600. Eligible Pennsylvania residents will see this increase when they file their 2023 tax returns.

To be eligible for the expanded tax credit, a tax filer must have a dependent child under the age of 13; a spouse who was physically or mentally incapable of self-care and lived with the person filing the taxes for more than half the year; or another dependent who’s unable to care for themself and has resided with the tax filer for more than half the year.

The expanded credit is expected to reach 210,000 Pennsylvania families, Pennsylvania Secretary of Revenue Pat Browne said.

Rising child care costs 

Parents, Democratic lawmakers, and policy experts said the expanded credit is not a cure-all for people struggling to pay for care, but it does offer much-needed funds in the face of stagnant wages and rising child care costs.

“There’s no question it will help,” Marc Stier, executive director of the progressive Pennsylvania Policy Center think tank, said of the credit expansion. “It will help because child care is an enormous expense, and it actually prevents many people from working because the cost of child care is so much that people choose not to work so they can take care of children or seniors or disabled people simply because they can’t afford to pay for that care. So it will help lift some people out of poverty.”

The Center for American Progress reported that in 2022, the most recent year for which data is available, the average annual child care tuition for an infant in center-based care in Pennsylvania was $12,152. For a 4-year-old, that dipped to $10,150. The average household income in Pennsylvania was $41,234 between 2018 and 2022, according to U.S. Census data.

Snyder faced costs of $1,000 per month to send her son to day care.

“It was $250 a week for three days, which is expensive,” Snyer said. “And as a single mom and with a single income, paying almost $1,000 a month for child care is exorbitant.”

LaTavia Michael, a Pittsburgh resident and single mother of three children, works full time in the banking sector. She says she will benefit from the expansion.

“I am grateful when there is a giveback to, I guess I will consider myself the little man,” said Michael, who is also a member of Moms Rising.

Still, she added, the fact that she is working full time and is still struggling to pay for child care and other necessities is something state and federal lawmakers need to address.

“I don’t think I need the tax break,” she said. “What I need is my employer to provide child care and it be free. If you want me to go to work, then you provide that spot.”

Michael added, “If the rich have a problem with people needing benefits or needing tax breaks and tax cuts, they need to think about the reasons why, because full-time employees technically should not need to have these programs or any assistance if they were getting quality wages.”

Child care costs are high, and continue to rise, in part because child care centers are often legally mandated to provide low child-to-teacher ratios, and child care providers typically go through extensive training and education, policy experts explained. Experts and parents do not want the field to become less regulated, but they emphasize there needs to be greater government support for child care providers in order to shoulder some of the financial burden now being placed on parents.

The Center for American Progress notes that prior to the pandemic, the average child care center operated at a profit margin of about 1%. Since then, pandemic-related closures and increased costs due to COVID safety measures have destabilized the sector, according to Karen Showalter, the senior director and Pennsylvania director at Moms Rising.

“We know the child care sector is in crisis,” Showalter said. “That was the case long before COVID. The pandemic really exacerbated very long-standing challenges.”

That, Showalter wrote, has resulted in rising care costs for parents but wages that are unacceptably low for providers.

“It’s definitely not that centers are just trying to milk families and get a lot of money out of it,” Showalter said. “It’s usually that they’re barely able to cover their costs as it stands now.”

Democratic lawmakers’ push to make child care more affordable

Shapiro’s signature on the bill increasing the child and dependent care tax credit comes after Democratic Reps. Tina Davis and Melissa Shusterman led efforts to pass House Bill 1259, which expanded the tax credit. The bill passed the in the Democratic-led House with bipartisan support in June.

The Republican-led Senate received the bill in June but wouldn’t hold a vote on it. That same month, elected officials held discussions on including the credit expansion in the state’s fiscal codes, Shusterman’s office wrote in an email. That allowed lawmakers to pass the credit expansion as part of the larger funding bill without relying on Republican support in the Senate.

“This is a major expansion,” Davis said. “And it’s going to affect anybody with children who want to get back in the workforce and have to get day care, and they will get money in their pocket after tax return time that will help alleviate some of the costs.”

State House Appropriations Committee Chair Jordan Harris noted during a Dec. 19 press conference that, while it was a bipartisan vote that passed the legislation introduced by Davis and Shusterman, it is the Democrats who control the House of Representatives; Democrats are the ones who got the bill to a vote and rallied support for it.

“We got it done this time,” Harris said. “We could have gotten it done in other terms, but we didn’t. And I’m not saying that my Republican colleagues do not support it; I don’t want to take that to them. But what I will say is, we have a majority in the House of Representatives. And that first opportunity of us being in charge of the House of Representatives, this got to the governor’s desk for his signature.”