Childcare Tax Credit

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 was filed by Representative Edgar Gonzalez, Jr., last year and will be refiled in the Illinois General Assembly in 2023. This 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 during the pandemic 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 have 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 saw this play out firsthand every day since the inception of the pandemic.

Our proposal establishes 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.

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