Harrisburg, PA — Secretary of Revenue Pat Browne today applauded legislation signed earlier this 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. Governor Shapiro recognized this was a difference maker and rightfully supported the expansion of this credit so that it will be even more impactful when the next tax season opens next year," 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/dependent) or $2,100 (two or more children/dependents).
- The credit cap phases down as income levels increase.
- The minimum credit will be $600 (one child/dependent) or $1,200 (two or more children/dependents), provided expenses are at least $3,000 per child/dependent.
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.
myPATH is Free Option to Request PA Credit on Your Return
The personal income tax filing season typically opens in January, at which point Pennsylvanians can file a PA Personal Income Tax Return (PA-40) to claim the Child and Dependent Care Enhancement Tax Credit.
When filing your PA Personal Income Tax Return (PA-40), you will need to complete PA Schedule DC, an additional form that allows you to report information related to your dependents and the expenses incurred for their care. One easy way to file your PA-40 and the Schedule DC is to use myPATH, the Department of Revenue's free online filing system. This system is user friendly and walks the taxpayer through all the necessary steps for filing your PA return.
The Department of Revenue will release further information once the next tax season opens so that Pennsylvanians have clear guidance on how to benefit from the Child and Dependent Care Enhancement Tax Credit.
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