Families receiving support from Child Care Counts earn an average of $47,436 annually.
All 2017 families received support for one child only. The total cost of their child's care (combined family and CCC portions) at a state-licensed child care center, averaged $18,651 in 2017. At most, under the PACE Act, families earning $47,436 may be eligible to receive a total of $1,050 in child care tax credits. This would reduce their average cost from $18,651 to $17,601.
Even with the expanded tax credit, a cost of $17,601 per year is not even conceivable for our families without our support.
**There are multiple parts to the proposed PACE Act; our analysis focuses only on how it will affect the current Child and Dependent Care Tax Credit (CDCTC.) NOTE: These examples are not intended, in any way, as tax advice. For tax questions, please consult a tax expert.
The Pace Act of 2017 is a proposal, making its way through Congress with support from both parties. The goal of the Promoting Affordable Child Care for Everyone (PACE) Act, in broad terms, is to make child care more affordable in this country and to broaden the access to quality care for working families. It expands upon tax provisions that are already in place - making them more generous. How generous, is the question. And, how much will it help families like the ones Child Care Counts serves?
How much will the expansion of the tax credit, under PACE, help the average working family with one child in care?**
Figure 1: Shows the maximum tax credit, families (with one child in care) can earn currently, compared to the max under the proposed PACE Act. For all incomes, the increase under PACE will be, at most, $450 per year.
How meaningful is this? The average cost of infant care at a state-licensed center can be as high as tuition at a state university. In the greater metropolitan DC area, one of the most expensive in the country for child care, it averages around $22,000 per year. While a potential $1,500 tax credit is nice, it doesn't begin to address the problems of affordability of quality child care.