On March 20, 2024, Wisconsin’s Democratic Governor declared plans to enhance the state child and dependent care tax credit to equate to the federal tax credit. This decision effectively doubles the state contribution, helping combat rising child care costs.
This strategic move seeks to ease the financial burden on Wisconsin’s families faced with escalating child care expenses. It will double state investment and provide much-needed economic relief to those most in need.
Aligning state & federal tax credits, is not only beneficial for the families but also fortifies the state’s economy and community welfare. The Governor firmly believes that this approach not only supports children’s welfare but also aids the local workforce impacted by soaring child care costs.
A key focus of the strategy is fostering an inclusive, flourishing economy. The initiative intends to ensure parents, particularly women, can participate more fully in the workforce by easing child care costs.
Doubling child care tax credit in Wisconsin
A call for public input has also been made to ensure accessibility to as many households as possible.
The revised tax credit could provide annual savings of around $4,000 for parents with two or more children, especially families with an annual income above $43,000. However, the results will vary based on each family’s income tax liability, family size, and income.
The policy amendment grants families with one child to claim expenses up to $10,000, and those with two children to claim up to $20,000. But, it’s important to note that the tax credit is non-refundable and can only reduce tax liabilities to zero without yielding refunds.
Despite its progressive nature, critics, including child care advocate Corrine Hendrickson, have criticized the delay in implementing the revised tax credit. They argue that immediate financial relief is necessary given current economic strains created by child care costs.
Aj Fabino, a noted financial reporter, praised the tax credit enhancement as a significant step towards reducing exorbitant child care costs in Wisconsin. The policy is expected to be operational in 2024 and is part of the Governor’s sustained effort to tackle the rising cost of child care and support child care providers.
