President Obama Proposes to Increase Tax Credit for Child Care

Periodically, I welcome a guest to join me on my blog. Katie Kinsfogel, Government Relations Specialist for Knowledge Learning Corporation has authored the following article on the President’s proposal to increase the tax credit for child care .

Recently, President Obama announced a series of initiatives to provide relief to overburdened middle class families, the cornerstone of which is a dramatic expansion of the Child and Dependent Care Tax Credit.  This credit assists families with employment-related child care expenses by reducing the amount of income tax they owe.

The tax credit currently varies based on income and ranges between $600 and $1,050 per child, for up to two children.

The child care tax credit has been increased only once in the last twenty-eight years, and has failed to keep pace with the cost of care.  For some families, the cost of care for two children is greater than the average cost of rent, and nearly as much as monthly mortgage payments for homeowners.  The President acknowledged this disparity in his announcement, showing a distinct understanding for the strain child care expenses places on family budgets. 

In his budget request for the fiscal year which begins on October 1, 2010 (FY ‘11), President Obama will ask Congress to approve tax cuts for all families with children in care with Adjusted Gross Incomes (AGI) under $115,000.  Families with incomes under $85,000 will see their child care tax credit nearly double.

If approved by the Congress all families with incomes under $85,000 will be able to deduct 35% of the first $3,000 in child care expenses for one child and the first $6,000 in expenses for two or more children.  Between $85,000 and $115,000, the credit will be phased-down from 35% of allowable expenses to 20%.

The President’s proposal is similar to several bills introduced in Congress by Representative Ruppersberger and Senators Boxer, Lincoln and Snowe, giving the Child and Dependent Care Tax Credit an advantage over a number of competing initiatives.

In light of challenges facing families in the current economy, President Obama’s proposal is a timely change, with bi-partisan support, that will provide meaningful tax relief for middle-income working parents. 

About Katie Kinsfogel, Government Relations Specialist, Knowledge Learning Corporation
Katie Kinsfogel is a Government Relations Specialist for the Knowledge Learning Corporation, the nation’s largest private provider of early childhood education.  Katie oversees the company’s government relations efforts for the West.  In this role, Katie is responsible for developing strategic communications, monitoring legislative activities, leading grassroots advocacy, strengthening strategic alliances, and building coalitions to drive public policy in support of high-quality early childhood education.