Overview

• For many low-income families, after paying for child care, taking a full-time job represents a net financial loss. For some, child care represents their largest expense after rent.
• A local child care tax credit could effectively target lower income populations to both encourage work and make work pay.

• Former welfare recipients with young children are 60 percent more likely to remain employed after two years if they receive help paying for child care.
• Tax credits targeted to help the working poor lead to increased employment. One study found that 60 percent of the 8.7 percentage point increase in annual employment of single mothers between 1984 and 1996 was attributable to the Earned Income Tax Credit (EITC) expansion.

• The federal government currently offers a nonrefundable child care tax credit of up to 35 percent of child care costs up to $3,000 per child or dependent (up to a maximum of $6,000 per two or more children). Since the credit is non refundable, families will only receive up to the amount they've paid in taxes.
• New York State currently offers a refundable tax credit of up to 110 percent of the amount for which they were eligible from the federal tax credit (whether or not they received it from the federal government). In contrast to the federal tax credit, the New York State child care tax credit is refundable so a very low income individual who does not have an income tax liability can still receive money.
• The proposed New York City child care tax credit would "piggy-back" on the state and federal credits, but would target resources to families with young children who often experience the greatest difficulties finding and paying for child care (households with children three years old and under with a household income less than $30,000).
  • If the local child care tax credit is approved by the City Council and the State Legislature, a family could receive a City child care tax credit of over $1,000. For example: a family with two children making $20,000 a year and spending $6,000 on child care expenses would receive over $1,500.
  • An estimated 49,000 NYC families would receive a credit in tax year 2006.
  • Eligible families that leverage this credit, in conjunction with the state and federal credit would have the support to consistently participate and stay connected to the labor force.

Learn more (in PDF)

Read the press release announcing the launch of the child care tax credit campaign in partnership with the New York City Commission on Women's Issues
Women's Commission Flyer (in PDF)
Women's Commission Flyer – Spanish (in PDF)

For a brief description of the Child Care Tax Credit, see the program summary in the CEO report.