Gov. Tony Evers signed a bill Monday that expands the current child and dependent care tax credit from 50 percent to 100 percent of the federal credit.
Act 101 provides tax relief to more than 110,000 Wisconsin taxpayers at an average benefit of over $656 per filer, totaling nearly $73 million in annual tax relief.
“The cost of child care is too darn high—making quality child care more affordable across Wisconsin is not just about doing what’s best for our kids, it’s also critical for keeping more folks and parents in our state’s workforce. Signing this bill today will go a long way toward defraying yearly family expenses on child care, giving Wisconsinites some breathing room in their household budgets and making sure our kids have the early support and care they need,” said Gov. Evers.
Wisconsin Act 101 expands the current state child and dependent care tax credit from 50 percent of the federal credit to 100 percent beginning with tax year 2024. The new law also increases the maximum amount of qualifying expenses—which include child care costs and other expenses related to providing care—that may be claimed for the credit from $3,000 to $10,000 for one qualifying dependent and from $6,000 to $20,000 for two or more qualifying dependents. These provisions, together, provide a significant boost in tax relief to Wisconsin working families.
Under current state law, a filer can claim a maximum credit of between $300 and $525 for one qualifying dependent and between $600 and $1,050 for two or more qualifying dependents, depending on the filer’s income and amount of qualifying expenses. Under the bill, the maximum credit available to taxpayers will now be between $2,000 and $3,500 for one qualifying dependent and between $4,000 and $7,000 for two or more qualifying dependents. In practice, this would mean a single head of household filer making $75,000 per year with $5,000 in expenses for one kid would see an increase in their credit from $300 to $1,000 per year. In another example, married-joint filers making a combined income of $150,000 per year with $15,000 in expenses for two kids would see an increase in their credit from $600 to $3,000.
According to a report from The Century Foundation,2,110 child care programs are projected to close without additional investments, resulting in the loss of over 4,880 child care jobs, leaving more than 87,000 children in Wisconsin without child care., report estimates a $500 billion economic impact resulting form parents leaving the workforce and reduced employer productivity.
