Shapiro administration offers tax credits to employers for helping with child day care costs

Lt. Gov. Austin Davis highlighted a new child care tax credit on Thursday that incentivizes employers to help cover their employees’ child care expenses. This includes providing day care services for employees or helping them covering day care costs 

Lt. Gov. Austin Davis hosted a roundtable discussion on childcare costs and how Gov. Josh Shapiro’s administration is working to lower them in Philadelphia on Thursday. 

Thursday’s roundtable was hosted at the Roxborough YMCA with members of the Early Learning Investment Commission (ELIC), which is a public-private partnership that brings together community leaders to make recommendations for early learning. 

“As a new dad, I’ve seen firsthand how important it is for working families to have access to high-quality and affordable childcare,” Davis said in a statement. 

“Childcare is infrastructure – much like roads, bridges and internet – and without it, our economy is crippled. That’s why the Shapiro-Davis Administration has increased the childcare tax credit for Pennsylvania families and, with the new bipartisan state budget, is creating a tax credit for employers that help their workers pay for childcare. But there’s more work to be done on this issue, and today’s roundtable provided valuable insights and perspectives.”

The commonwealth’s budget for the 2024-25 fiscal year includes a child care tax credit that was originally introduced by State Sen. Judy Schwank (D-Berks) prior to the start of the 2023-24 legislative session. 

Employers are eligible for the tax credit if they provide child day care or if they reimburse employees for any portion of their child day care expenses. 

“This tax credit acknowledges that both parents and employers have a vested interest in making child care more affordable and accessible in Pennsylvania,” Schwank said in a statement. “The bipartisan support of this proposal is what allowed it to be included in the tax code, as we’ve really built consensus around the need for quality child care.”

Last year, Shapiro signed an expansion of the Childcare Tax Credit into law that helped close to 210,000 Pennsylvania families. Pennsylvania previously matched only 30% of the federal Childcare Tax Credit, but now, the commonwealth fully matches the federal tax credit.  

“As a health care provider and legislator, I’ve seen firsthand how the lack of access to childcare can hurt families and our economy,” state Rep. Tarik Khan said in a statement.

“I’m pleased to support the Shapiro-Davis Administration’s efforts to make childcare more affordable and accessible, including employer tax credits and significant state funds to support early childhood education funding.”