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United Way of Lancaster County


Spotlight PA details Pa. budget’s childcare tax credit, expanded property tax rebates

The Pennsylvania State Capitol. (Source: Wikimedia Commons)

Pennsylvania’s 2022-23 budget includes two components that can ease low- and middle-income households’ tax burdens: A new childcare tax credit and a temporary expansion of the property tax credit.

The nonprofit news site Spotlight PA has posted an explainer outlining the two initiatives and how to access them.

The state’s childcare tax credit is modeled on the federal one and is budgeted at $24.6 million, Spotlight PA says. Some details remain to be worked out, but in general, families with two or more children will be able to claim up to $6,000. Because it is a tax credit, if the amount exceeds a filer’s tax liability, the difference will be refunded.

As for the property tax credit, the state will use $140 million in federal Covid-19 relief funds to boost property tax rebates by 70%. For more information, including eligibility requirements, click here.

The state budget does not include one element that advocates for low-income households had pushed for, among them United Way of Pennsylvania: An earned-income tax credit, or EITC, patterned on the federal one.

Like the child tax credit, the EITC offsets tax liability dollar-for-dollar, and amounts that exceed total tax liability are refunded to households.

According to the United Way of Pennsylvania, a 10% state EITC would cost a little over $200 million, or nearly 10 times the cost of the new child tax credit. However, the organization contends the EITC would more than pay for itself through increased economic growth and reduced social spending.

In a statement, the organization called the EITC a “missed opportunity” and said it will continue advocating for one.