Expands Tax Credit to Alleviate Child Care Expenses in Wisconsin – Financial Relief Ahead!

Increasing Support: New Law Boosts State Credit, Offering Potential Relief for Over 110,000 Taxpayers

According to Post Crescent, Wisconsin Governor Tony Evers signed a law expanding a state tax credit for child and dependent care expenses that provides relief for families facing high child care costs. From March 4 the new law will increases the state credit known as the Child and Dependent Care Expenses Tax Credit and potentially exceeding its federal counterpart by spring 2025 and with child care expenses often surpassing college tuition this expansion aims to ease financial strain for Wisconsin families and it will benefit taxpayers who may receive an average additional credit.

Eligible Wisconsin taxpayers can claim both federal and state tax credits for expenses related to caring for a child or dependent, enabling them to maintain income. The expanded state credit raises the maximum allowable expenses and aligns the percentage of eligible expenses with federal guidelines. This means qualifying taxpayers could receive a state credit of up to $2,000 to $3,500 for one dependent, depending on income, with similar adjustments for two or more dependents. However, concerns persist about the affordability of child care in Wisconsin, as average annual costs far exceed the affordability threshold set by the U.S. Department of Health and Human Services, placing additional financial strain on families.

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Expands Tax Credit to Alleviate Child Care Expenses in Wisconsin – Financial Relief Ahead!(PHOTO: getty images)

Rising Costs: Child Care Providers Hike Rates, Adding to Financial Pressure on Families

Despite the positive impact of the new law, questions remain about its effectiveness in addressing the broader issue of affordable child care in Wisconsin. Child care providers have reported increasing rates since 2022, exacerbating financial challenges for families. While the expanded tax credit offers some relief, achieving truly affordable child care remains a significant concern, especially as the cost of care continues to rise, leaving many families struggling to manage their finances.

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