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Make the Child Care Tax Credit Permanent by Passing the American Families Plan

By: David Haas

The burden of paying for child care keeps millions of American families in poverty and prevents millions of other families from saving money for education or to buy a house. The burden weighs particularly heavily on single mothers, but it also affects two-income families because child care is so expensive. The Child Care Tax Credit reduces that burden somewhat, and the Biden administration has increased the value of the credit from $2000/year to $3600 for children under 6 and to $3000 for children 6 or over.

The administration has also converted half of the tax credit to cash payments that families can receive every month. The other half will be received when a family files its tax returns in April. Finally, the payment has also been made “fully refundable,” which means that a family can receive the credit in the form of a cash payment even if it owes no income tax. This is very important for poor families, who often do not earn enough to pay income tax.

The enlarged, fully refundable benefit is currently temporary because it is a part of President Biden’s COVID-19 relief program, and the benefit will expire at the end of 2021. However, President Biden’s American Families’ Plan, which is currently being debated in Congress would make the benefit permanent.

As Democrats, we must work to support the passage of the American Families Plan to provide this and other benefits. In Outagamie County, we will be canvasing in support of the permanent extension of the Child Care Tax Credit, which will make a big difference in the lives of millions of families in Wisconsin.

The tax credit gets us part of the way toward the goal of making affordable child care available to all families, but it will still leave us with a long way to go. The average yearly cost of full-time day care in Wisconsin is $12,567, and Wisconsin is not among the most expensive states. So, we cannot stop here, but the expanded and fully refundable Child Care Tax Credit will help millions of families, and we should do what we can to make sure that it becomes permanent.