House Approves Employer Child Care Tax Credit From Pennsylvania

(MENAFN- ValueWalk) Child care, it seems, has become a priority for many states. Several states have already approved a child care tax credit for employers while many are in the process of approving a similar measure, including Pennsylvania. Recently, the Pennsylvania House of Representatives approved a child care tax credit from Pennsylvania and has sent it over to the Senate for consideration.

Child care tax credit from Pennsylvania – who will get it?

On Wednesday, the Pennsylvania House of Representatives approved a bill (House Bill 1958) – the Employer Child Care Contribution Tax Credit – that would offer tax credits to employers to help employees offset child-care expenses. The House voted 155-47 to approve the measure.

“We need access to child care to ensure a functional economy because without access there is no workforce, no tax revenue and our economy halts,” said Rep. Liz Hanbidge (D-Montgomery), who is the sponsor of the bill along with state Rep. Morgan Cephas (D-Philadelphia).

If approved, the child care tax credit will be 30% of the total contributions that an employer makes toward the employees' child care. Up to a $500 contribution per employee will qualify for the child care tax credit from Pennsylvania.

The Employer Child Care Contribution Tax Credit bill would amend the state's Tax Reform Code to create the credit. If the bill becomes law, employers will be able to claim the child care tax credit from Pennsylvania starting in 2025.

The credit won't be counted as income on employees' personal income tax returns. Also, the credits are not transferable and can't be sold, carried over or refunded.

The Department of Revenue estimates the employer child care tax credit could result in $8.1 million in credits in the initial year.

What's the need?

Highlighting the need for such programs, Hanbidge blamed“insufficient wages” of child care workers for the shortage of workers in the state. The average hourly wage of child care workers in the state is $14.18 per hour, $1.24 less than the national average, according to data from the U.S. Bureau of Labor Statistics last year.

Also, Hanbidge noted that the U.S. loses about $122 billion annually because of insufficient child care. In October last year, a report from the U.S. Chamber of Commerce estimated that Pennsylvania loses $591 million each year in tax revenue because of child care issues.

Several states, including West Virginia and New York, have implemented similar credits to encourage businesses to help offset employees' child care costs, while Alabama , Connecticut and Wisconsin are considering similar credits for employers as well.

Pennsylvania's employer child care tax credit bill follows the expansion of Pennsylvania's child care tax credit, which was signed into law by Gov. Josh Shapiro in December. The expansion, which allows individuals to claim 100% of the federal child care tax credit they claimed, received bipartisan support as well.



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