Big Relief for Working Families’ Childcare Costs

The Childcare Advance offers meaningful support to working families, providing relief from the crushing—and growing—costs of childcare. It allows parents with the youngest children to offset state taxes, reducing their state tax bill to zero at the time they need it the most: when the costs are greatest, their earning power is often lowest, and the need to find high-quality options is most urgent. Families pay the state back over time, without interest when they are better positioned to do so.

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Frequently Asked Questions
Who does this help?
Working parents and high-taxed young families who will have more money in their pockets every month. This bill benefits all families that are crushed by childcare costs, with a significant infusion of dollars when they most need it. Families recognize the benefit of this policy -- in national polling by Data For Progress, support for the policy was especially strong among people in their prime parenting years (ages 30 - 44).
How is this so low cost to the state?
Because deferred funds are returned to the state, costs to the state are very limited. Almost all of the state’s revenue is recovered over time. This is also great for businesses big and small - allowing more parents the ability to afford high-quality, consistent childcare.
Why is this such an effective use of state funds?
Unlike saving for college or planning for retirement, families typically don’t spend years saving for childcare. It’s the largest expense for many parents - but it sneaks up on them. As a result, families are driven into bad economic and painful personal choices. An interest-free deferral of their tax burden is the best option for families whose childcare costs decrease as their earning power increases over time.
Does this help the lowest-income families who have low tax burdens?
There are childcare support programs in most states to provide help to the lowest-income families. In states with waiting lists for those programs, the Childcare Advance can be introduced together with a proposal to expand or enhance existing programs.
  • Licensed childare providers
  • Childcare workers
  • Payday lenders
Model Policy
This act shall be known as the Childcare Advance Act
This act amends the tax law to establish a “Childcare Advance” which enables certain taxpayers to defer payment of a portion of their tax liability.

(a) Any resident taxpayer who, in a taxable year, has employment-related expenses for childcare for a dependent under age five, may defer payment of their tax liability for that taxable year under this article by the amount of those expenses but not to exceed two thousand dollars.

(b) Any taxpayer who defers tax liability under subdivision (a) of this section shall be liable: (i) once the taxpayer is no longer taking the deferral, for the full amount previously deferred divided into equal payments over ten years, except that (ii) in any future years the taxpayer takes the deferral, that taxpayer is liable only for one-tenth of each deferral taken five or more years prior until each of those deferrals is repaid. At no point shall the taxpayer be liable for amounts previously repaid. Repayment shall be made without interest.

(c) At the end of every tax year, the Tax Department shall notify each taxpayer who has deferred tax liability under subdivision (a) of this section of the total amount of their deferred liability, the tax year in which repayment will begin, and an estimate of the amount for which the taxpayer will be liable each year once the eligibility expires.

(d) Nothing in this section shall prevent a taxpayer from repaying accumulated liability earlier than the schedule set forth in subdivision (b) of this section, or taking less than the total amount allowable under subdivision (a) of this section in any given tax year.

(e) Any taxpayer that moves to a jurisdiction that does not maintain tax reciprocity with the state, shall be liable for the entire amount deferred on the tax filing for the tax year in which such change of residence occurs, but subject to approval of the Department shall be directed to repay that liability through a payment plan approved by the Department.

(f) The Department shall provide for the repayment of deferrals under this section to be made through payroll withholding, and shall address repayment in cases of divorce.