Title

How Would a Permanently Refundable Child and Dependent Care Credit Affect Eligibility, Benefits, and Incentives?

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-3156-0268

Publication Date

6-13-2022

Source

Public Finance Review 50(1): 33-61

Abstract

The federal Child and Dependent Care Credit (CDCC) subsidizes child care costs for working families. Before 2021, the CDCC was nonrefundable, so only families with positive tax liability after other deductions benefited. I estimate how CDCC eligibility, benefits, and marginal tax rates would change if the credit were made permanently refundable. Under refundability, some 5 percent of single parents gain eligibility and receive on average over $1,000 annually. Eligibility increases are largest among Black and Hispanic households. Increases in marginal tax rates among moderate-income taxpayers are small.

DOI

https://doi.org/10.1177/10911421221092053

Publisher

Sage Journals

Subject Areas

LABOR MARKET ISSUES

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Citation

Pepin, Gabrielle. 2022. "How Would a Permanently Refundable Child and Dependent Care Credit Affect Eligibility, Benefits, and Incentives?" Public Finance Review 50(1): 33-61. https://doi.org/https://doi.org/10.1177/10911421221092053