Maryland Improves Its Child and Dependent Care Tax Credit to Help More Families

Class of preschool children raising hands to answer teacher

Class of preschool children raising hands to answer teacherSince the wildly unpopular 2017 tax scam passed, replete with massive tax breaks for the rich and big corporations but very little for the rest of us, tax policy has given working families little to celebrate. But this week, Maryland families scored an exciting win when Maryland governor Larry Hogan signed legislation that would improve Maryland’s Credit for Child and Dependent Care Expenses.  
Child care is a huge concern for Maryland families, as it is across the nation: 79 percent of children age 12 and under in Maryland had mothers in the workforce, in 2018. But in 2018, average annual child care costs in Maryland ranged from over $7,400 to over $16,000 (depending on the care arrangement and the age of the child). And one national survey put the average annual cost of adult dependent care in Maryland at $20,800 in 2018. The high cost of care places a tremendous burden on working parents, and especially women. 
The new law, sponsored by Senator Nancy King and Delegate Ariana Kelly, would give families in Maryland a little more help in meeting the costs of that care. First and foremost, the new law would make the credit refundable for filers with incomes of $50,000 or less ($75,000 for filers who are married and filing jointly). This alone is a significant improvement: for tax year 2016, an estimated 22,000 Maryland families were unable to claim the state credit simply because it was not refundable. The new law would also increase the credit amount and income limits. Overall, it has been estimated that, under the new law, over 90,000 more families would be able to claim the credit, and the amount of tax benefits received by families would increase by about five-fold, compared to tax year 2017.  
While direct assistance remains the most effective way to help low- and moderate-income working families access child care, families need all the help they can get – and that includes robust child and dependent care tax credits that support hardworking families who are struggling to make ends meet. We applaud Maryland for taking strong action to ensure that more families can access tax assistance for child and dependent care. One of these days, maybe federal policymakers will give us similar reason to celebrate.Â