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Childcare Tax Credit

Childcare Tax Credit Blog

Authors:  

  • Minna Pomeroy, Leverage People
  • Leslee Cohen, All Rise Legal Counsel

Employers across our state are struggling to find enough employees to support their businesses.  Indeed, some businesses have been forced to scale back their operations because of a lack of employees in the workforce.  The Small Business Advocacy Council is championing legislation that will provide a childcare tax credit to working families so parents can get back into the workforce.  This legislation, filed by Representative Edgar Gonzalez, Jr., could be an extremely effective tool in the effort to get more Illinoisans back to work after the fallout of the COVID-19 pandemic.

This tax credit is especially important to women. The unprecedented closure of schools and childcare facilities has disrupted the progress and strides they have made in the labor market over the last 60 years, which had significantly lessened the pay and responsibility gaps between men and women. Many studies have highlighted the negative impact of additional childcare responsibilities on women in the workplace during COVID-19, especially for single mothers and also married mothers (which has been labeled the “COVID motherhood penalty”). Not only are opportunities to find safe and accessible childcare elusive, but they are also very expensive.  As two female small business owners raising children ourselves, we not only empathize but have also seen this play out firsthand every day since the inception of the pandemic.

Our proposal would mirror the federal Childcare Tax Credit but, on a smaller scale. We propose to establish a tax credit for working families who make $75k/year filing jointly or $45k/year as a single filer with children 17 years or younger. For the first eligible child, the taxpayer will receive a credit in the amount of $1,500. Each additional eligible child would yield a credit of $500, with a maximum allowable tax credit per family of $2,500. The proposal calls for a program cap of $100,000,000 and a sunset in 2025.  This investment in working families and our economy will generate revenue by fostering the growth of businesses struggling to maintain their workforce and by getting parents back to work so they have money to spend in our economy.

You can learn more about this legislation here.

Let’s do this together.  It is a win-win that will support small businesses, women, families, and our economy!

 

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