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House Finance Committee advances bill to expand state child and dependent care tax credit
Summary
House Bill 1534, which moves Pennsylvania’s child and dependent care enhancement tax credit into the Tax Reform Code and expands eligibility for families that use dependent care flexible spending accounts, passed the House Finance Committee as amended on a 14–12 vote.
House Bill 1534, which moves Pennsylvania’s child and dependent care enhancement tax credit into the Tax Reform Code and expands eligibility for families that use federal dependent care flexible spending accounts, passed the House Finance Committee as amended on a 14–12 vote.
The measure, sponsored by Representative Handbidge, would permit taxpayers who did not receive a federal child and dependent care credit but who participated in a dependent care assistance program (a federal FSA) to claim the same state enhancement credit as those who qualify under the standard state pathway. Shannon Snell, the committee’s senior research analyst, described the change as one that “ensures that all families with eligible child and dependent care expenses are able to claim the Pennsylvania child and dependent care enhancement tax credit.”
The committee first approved a technical amendment (amendment 1007) to remove duplicative language from the Fiscal Code after the credit is moved into the Tax Reform Code. Snell said the amendment “would repeal the Pennsylvania child independent care enhancement credit from the Fiscal Code because we’re moving it into the Tax Reform Code to make sure there’s no duplicative language.” The amendment passed unanimously.
A fiscal analysis provided to the committee by the Department of Revenue estimates a budgetary impact of approximately $10 million to $12 million in year two if the change is adopted, and the department estimated that about 24,800 families would become eligible for the credit under the expanded language.
Committee roll call was conducted by legislative staff. After debate and the technical amendment, Chairman Samuelson announced that House Bill 1534 carried out of committee as amended by a vote of 14 yes and 12 no.
The committee record shows the bill will move next according to normal legislative scheduling; the transcript indicates no additional committee-level amendments were adopted beyond the technical repeal of the duplicate Fiscal Code language.
Background: The measure does not create a new federal credit; it adjusts Pennsylvania’s treatment of an existing state enhancement credit and the statutory location of the credit within state codes to allow an alternate eligibility pathway for taxpayers who use dependent care FSAs. The committee discussion focused on the code move and the mechanics of qualifying when taxpayers did not receive the federal credit.
No further action was recorded in the transcript beyond the committee’s vote to pass the bill as amended.
