Hanbidge and Cephas bill strengthening affordability and accessibility to child care passes the House
Rep. Morgan B. Cephas May 22, 2024
HARRISBURG, May 22 – Today, the House passed legislation that would create a tax credit for Pennsylvania businesses who contribute to employees’ child care expenses.
House Bill 1958’s co-prime sponsor, state Rep. Liz Hanbidge, D-Montgomery, said that the proposed tax credit equals 30% of the total contributions an employer makes towards child care for all its workers, counting only the first $500 in contributions made per employee. The credit would not be considered income on the employee's personal income tax return.
“Access to child care is a cornerstone of our economy. Lack of affordable and accessible child care impacts our families, our workforce, and the state's tax revenues. For numerous reasons, our child care ecosystem is in a fragile state, this bill is just one way we can ensure families are able to afford child care and that employers are able to retain good employees in a competitive workforce,” Hanbidge said. “Incentivizing employer contribution to employees’ child care expenses can help ensure workforce access to parents trying to support families.”
“Working parents who know that their children are in safe and quality care can better concentrate on their day-to-day work and overall careers," said state Rep. Morgan Cephas, D-Phila., a co-prime sponsor of the bill. "The state can be doing more to help employers understand this motivating force. A tax incentive would go a long way in having more employers include financial assistance for child care in their strategic business plans, creating a more stable workforce in Pennsylvania while continuing to help families re-enter the job market.”
Pennsylvania loses an estimated $3.47 billion annually as a result of insufficient child care, according to a study by the U.S. Chamber of Commerce Foundation in partnership with the Pennsylvania Chamber of Business and Industry and the Pennsylvania Early Learning Investment Commission. That number includes $591 million in tax revenue lost annually because of child care issues. One-third of the U.S. workforce, or an estimated 50 million workers, has a child under age 14 in their household.
While the legislature increased the child and dependent care tax credit last year, Hanbidge and Cephas said that the General Assembly must do more to make child care more accessible for working families. Right now in Pennsylvania, the average annual cost of child care for infants is $12,308, for toddlers is $11,402, and for four-year-olds is $10,158. To be considered affordable for families, child care should not cost more than 7% of a family's annual income.
The bill passed 155-47 and will now await consideration in the Senate.