Preschool & Daycare Center Serving Houston, TX

A tax credit is even more valuable to families than a tax deduction! It’s a dollar-for-dollar reduction in the taxes you owe. In addition, some credits are refundable—reducing taxes otherwise owed to zero and getting a refund.

 NEW Federal Tax Benefits:

The American Rescue Plan Act of 2021 enhanced the benefits for families with children requiring child care. Here’s a breakdown of the details:

Under current federal law, eligible families can claim 2021 child care tax credits up to the following maximum amounts:

–       $8,000 from the federal Child and Dependent Care Tax Credit (up to $4,000 for each of your first two children). For 2021, this is a refundable credit.

–       $6,728 from the federal Earned Income Tax Credit.

–       $3,600 per child under six (as of December 31, 2021) and $3,000 for children 17 or younger (as of December 31, 2021) from the federal Child Tax Credit (these amounts were permanently enacted into the law).

 There are rules for these federal tax credits, so please speak to your tax advisor about how they apply to your family. In the meantime, this child care tax credits calculator is a quick tool for a broad estimate.

 State Tax Benefits:

Each state offers different tax credits to offset the cost of child care. See what benefits might be available to you in Texas.

If your family needs help with tuition, there are state and local agencies that provide tuition subsidies. This map is a great starting point for finding available financial assistance resources.

More and more employers add child care benefits to their employee compensation packages because it’s hard to do your job without reliable child care!

Speak with your employer or HR department about whether they offer child care benefits and how to use them.