Press Release

As Tax Season Begins, Gillibrand Announces New Legislation To Expand Tax Breaks Easing Burden Of Sky-High Child Care Costs For Working Families

Mar 9, 2014

New York, NY – As tax season begins to get into full swing, U.S. Senator Kirsten Gillibrand (D-NY) was joined today by New York City parents and advocacy groups to announce new legislation being offered by Gillibrand that would change the federal tax system to help make child care more affordable and accessible for working parents and families. New York City families face sky-high child care costs – the average City family now spends approximately $15,210 per year for an infant, $12,116 for a toddler, and $10,920 for a school-age child, according to new data from the NY State Office of Child and Family Services. Senator Gillibrand’s push for affordable child care is part of her American Opportunity Agenda aimed at ensuring more working women have a fair shot at earning financial security by modernizing America’s outdated workplace policies.
New York City currently ranks among one of the nation’s most expensive places for child care — for many families, paying for child care represents a family’s largest monthly expense after housing. To help low-income and middle class families save more on quality child care, money that would go right back into the local economy, Senator Gillibrand is pushing to more than double the federal child care tax credit and make the credit refundable, allowing working parents to receive a maximum credit of $3,000 for one child, up from $1,050, and put more money back in their pockets.
Currently, the most City families can receive through the child care tax credit is $1,050 for one child, and the amount decreases to $600 as income increases. For example, a New York City family making $50,000 currently receives a $600 tax credit per child – under the Gillibrand proposal that would increase to $2,340. Senator Gillibrand is also proposing new legislation that would allow middle class families to deduct up to $14,000 a year in child care expenses for two or more children ($7,000 for one child), lowering the total tax bill for a family of four making $100,000 a year by $3,500.  
“If you can’t afford child care, as many middle class families can’t, and you don’t have a family option, the choice you’re left with is to leave your job and stay at home to care for your children,” said Senator Gillibrand. “That means less income for working families, more women leaving the workforce, and a weaker middle class.  It doesn’t have to be this way. We can keep more working mothers in their jobs, and more children in quality day care – when we make it affordable – and make our policies reflect today’s reality that women have to work for a living. This isn’t a lifestyle choice. This is a fact of survival for many New York City families.”   
“Parents should not have to choose between keeping their kids safe and earning a paycheck,” said Dina Bakst, Co-Founder and Co-President of A Better Balance.“A Better Balance applauds Senator Gillibrand’s plan to reduce childcare costs, allowing more working women to stay on the job and earn the financial security they deserve.”
“In New York City the cost of quality child care causes many families to make difficult choices, to sacrifice, and sometimes to forego the care they believe is best for their children,” said Jennifer Jones Austin, CEO & Executive Director of the Federation of Protestant Welfare Agencies. “However, educational opportunities should not be based on income, especially opportunities that will provide children the strongest foundation for success in learning and life in the future. Senator Gillibrand’s proposals would help level the playing field and provide the opportunity for all children to access high quality, affordable early childhood education.”
In 2012, New York was ranked the second least-affordable in the nation for full-time day care for an infant, according to a report by Child Care Aware. A two-parent family in New York spent an average of 16.5 percent of their annual income on care for their infant. For a single mother in New York, the cost of care was greater than 57 percent of her income. 
As of the latest Census data from 2010, almost half of all City families with children have kids under six years old. Brooklyn has the most number of families – approximately 147,000 – who have young children, toddlers, and infants. Queens comes in second with an estimated 117,000 families with youngsters. More than half of all City families have children under 18 years old.
To address the rising cost of child care, Senator Gillibrand is pushing for flexible options for different types of families with varying needs, to help reduce the cost of quality of child care. 
Expanding the Dependent and Child Care Tax Credit (DCTC)
Senator Gillibrand is working to more than double the Dependent and Child Care Tax Credit (DCTC). Currently, the child and dependent care tax credit is worth a maximum of 35% of child care expenses, up to $1,050 per child or $2,100 for two children. The credit applies to any child under the age of 13 and to disabled dependents of any age. The Right Start Child Care and Education Act would increase the maximum credit from $1,050 to $3,000 per child, by raising the percentage of the tax credit to 50% and doubling eligible expenses. The legislation also makes the tax credit fully refundable, allowing low-income families with no tax liability to receive the full benefit.  
For example, under current law, a New York family with two children earning $30,000 a year, receives a credit of $1,620 ($810 per child). Under the Gillibrand proposal, which would make the tax credit refundable, the same family with two children could receive a maximum credit of $6,000 ($3,000 per child).
Senator Gillibrand’s legislation would also encourage more New York businesses would be able to provide on-site child care services for their employees.  Legislation would provide employers with a tax deduction worth 35 percent of the cost of creating these facilities. Currently, employers can only deduct 25 percent of their costs.
Creating a New Child Care Tax Deduction
Senator Gillibrand has introduced the Child Care Deduction, which would allow middle-class families to deduct the cost of child care from their taxes as a business expense. The new legislation would create a new tax deduction, allowing families to deduct as much as $14,000 a year for child care expenses ($7,000 for one child). 
Families would have the option of choosing an above-the-line deduction to help mitigate the high cost of child care. After all, child care expenses are necessary, non-optional costs to families with working parents that cannot forfeit needed wages.
For example, under current law, a family with two children earning $100,000 can receive a maximum credit of $1,200. Under the Gillibrand proposal, this family spending $14,000 a year on child care expenses could deduct the full amount, therefore, lowering their taxable income by $3,500. 
Senator Gillibrand plans to file her Child Care Deduction as an amendment to the Child Care and Development Block Grant (CCDBG) Act, which will be on the Senate floor this week.
Gillibrand’s child care proposals are part of her American Opportunity Agenda, which lays out five long overdue and common sense solutions to empower working families, reward hard work and help businesses compete:  
1. Paid Family and Medical Leave
Gillibrand’s FAMILY Act would make paid leave available to every worker in this city by expanding Paid Family Medical Leave and creating a self-funded, paid family medical leave insurance program.
2. Increase the Minimum Wage
The Fair Minimum Wage Act of 2013 would increase the federal minimum wage from $7.25 an hour to $10.10 over the next three years, with future increases indexed to the rate of inflation. It would also raise the minimum wage for tipped workers for the first time in more than 20 years.
3. Provide Universal Pre-K
The Strong Start for America’s Children Act would establish a federal-state partnership to provide access to high-quality Pre-K programs for all low-income and moderate-income children. It also increases the quality of infant and toddler care in center-based settings while improving Child Care Development Block Grants.
4. Make Quality Affordable Childcare Accessible
Gillibrand’s plan would provide tax cuts to help pay for child care, incentivize businesses to offer child care or allow more parents to work from home, and expand access to programs that help families afford child care.
5. Equal Pay for Equal Work
The Paycheck Fairness Act would close loopholes employers can use to shortchange workers, hold big corporations accountable for pay inequity, make it easier for workers to pursue back pay, and empower working women to be appropriately and accurately compensated for their work and value.