Wisconsin Governor Tony Evers has introduced a transformative change to the state's childcare system, benefiting many working families and addressing the childcare affordability crisis head-on. With the signing of Assembly Bill 1023 into law, child and dependent care in Wisconsin is set to become significantly more affordable for over 110,000 taxpayers.
While at La Casa de Esperanza in Waukesha, Governor Evers ushered the 2023 Wisconsin Act 101, a substantial expansion of the current child and dependent care tax credit. The newly signed law marks a pivotal change by introducing a 100 percent match of the federal credit, a previously unprecedented move in the state.
How Will This Change Impact Wisconsin Families?
Working families across Wisconsin have been stretched thin by rising childcare costs. However, the passage of this bill indicates a major shift in fiscal support toward these fundamental needs. As a result, taxpayers with dependents are set to see an increase in their average benefits, yielding close to $73 million in annual tax relief. This increase marks a momentous leap from the previous maximum credits of $300 to $525 for one dependent and $600 to $1,050 for two or more dependents. Now, families can anticipate credits from $2,000 to $3,500 for one dependent and $4,000 to $7,000 for multiple dependents, injecting a much-needed boost into household finances.
Unpacking the Fiscal Details, The Figures and Facts
A vital aspect of this law revolves around its impact on qualifying expenses, which have been substantially raised. For one qualifying dependent, the maximum amount has soared from $3,000 to an impressive $10,000, and for two or more, from a previous $6,000 to a generous $20,000.
The implications for individual filers are profound. For a single head of household earning $75,000 annually, the credit for $5,000 in childcare expenses now grows from $300 to a substantial $1,000. Similarly, married-joint filers with a combined income of $150,000 could see their credit for $15,000 in childcare expenses surge from $600 to an impactful $3,000, offering substantial relief. Starting from tax year 2024, these changes are foreseen to reduce individual income tax receipts by nearly $72.9 million annually.
What Does This Mean for Wisconsin's Child Care Industry and Workforce?
Governor Evers' bill reaches beyond immediate tax relief. It lays the foundation for a robust childcare infrastructure by potentially preventing the closure of over 2,110 childcare programs and safeguarding the jobs of approximately 4,880 childcare professionals. The Child Care Counts Program, which nearly 4,700 child care providers depend on, is also set to continue, thanks to a $170 million emergency funding measure directed by Governor Evers, maintaining the program through June 2025.
With the potential economic impact of parents forced out of the workforce and reduced productivity looming over the state, Governor Evers labels the current situation without this bill's aid as nothing short of catastrophic. His aggressive stance on bolstering the industry with the necessary investments signals a committed approach to mitigating a crisis that would otherwise leave more than 87,000 children without care.
The bipartisan bill AB 1023, now recognized as 2023 Wisconsin Act 101, reflects more than a financial boon for families- it embodies a strategic and long-term effort to stabilize an essential pillar of society: the childcare system. Given the economic repercussions that a failing childcare system can induce, the ambitious nature of this Act cannot be understated, as it aims to secure the financial future and well-being of countless families across Wisconsin.
