In the near future, I plan on introducing legislation that would make enhancements to the Employer Child Care Contribution Tax Credit Program.

The Employer Child Care Contribution Tax Credit can provide a meaningful way for employers to support their employees. The program enables employers to receive a state tax credit when they provide contributions toward an employee’s eligible child care costs. This program was established under Act 56 of 2024, to help offset rising child care costs through tax credits awarded to employers that provide contributions to child care provider organizations, registered under the Department of Human Services (DHS).

In Pennsylvania and nationwide, the price of child care remains too high for many families. According to Child Care Aware of America, the national average price for child care rose from $10,174 in 2020 to $13,128 in 2024, an increase of 29%. Since 2020, child care costs have grown faster than overall inflation, placing an increasing strain on family budgets. When compared to other household expenses, such as housing and college tuition, child care now often has the highest price.

The Employer Child Care Contribution Tax Credit was designed to encourage Pennsylvania businesses to support their employees who have children in eligible child care or early learning programs. The tax credit is equal to 30% of the employer’s contributions to child care providers, with a contribution limit of $500 per employee per year. For example, if $500 is contributed per employee, a $150 per employee credit will be awarded to the employer.

Under my proposal, the tax credit amount would be increased from 30% to 100% of the employer’s contributions, with a contribution limit of $10,000 per employee per year. These changes would increase the maximum tax credit that can be awarded under the program from $150 per employee annually to $10,000 per employee annually. Total tax credits would be capped at $10,000,000 per fiscal year. This would offset over 75% of the average price for child care and further incentive employers to provide financial support to cover child care expenses for their employees.
  
While the creation of the Employer Child Care Contribution Tax Credit was an important first step to help employers provide affordable child care options for their employees, the high costs of child care warrants additional incentives for this important program. Please join me in co-sponsoring this important legislation.