Child and dependent care expenses can take a huge bite out of families’ budgets. But direct child care assistance is not available to every family that needs help paying for child and dependent care.
The federal Child and Dependent Care Tax Credit and similar state tax provisions can help eligible families offset their child and dependent care expenses. These tax provisions can lower the income taxes that families pay and, in some cases, give cash refunds to families whose incomes are too low to owe taxes.
Twenty-six states (including the District of Columbia) have child and dependent care tax provisions, most of which are based in some way on the federal credit. Twelve of those states offer refundable credits (listed in bold).