Tax Subsidies to Help Low-Income Families Pay for Child Care
Friday, July 01, 2005
- Organization: Urban Institute
- Link: http://weeklydigest.c.topica.com
The Urban Institute reports that the federal income tax code subsidizes child care in several ways. The largest subsidy is the Child and Dependent Care Tax Credit (CDCTC), a nonrefundable tax credit that offsets up to 35 percent of working parents' child care costs, subject to limits. Though not earmarked specifically for child care, the refundable Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) provide more help to low-income working families. This paper considers options to reform the CDCTC to assist low-income families. The paper also examines expansions to the refundable tax credits that help families with children.
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