Please ensure Javascript is enabled for purposes of website accessibility Hanbidge bill to help more families qualify for dependent care tax credit passes House

Hanbidge bill to help more families qualify for dependent care tax credit passes House

Rep. Liz Hanbidge    June 25, 2025 | 5:09 PM

HARRISBURG, June 25 – Legislation introduced by state Rep. Liz Hanbidge, D-Montgomery, that would ensure all families with eligible child and dependent care expenses are able to claim the Pennsylvania Child and Dependent Care Enhancement Tax Credit passed the House 128-75 today.  

Under the current law, enacted in 2022 and expanded in 2023, taxpayers must qualify for the federal child and dependent care tax credit to qualify for the state credit. However, some families who take advantage of a dependent care assistance program, an employee flexible spending account that provides up to $5,000 in exclusions from taxable income on their federal taxes, are being shut out of the state tax credit if their participation in an FSA disqualifies them from the federal tax credit.       

House Bill 1534 would enable more than 24,000 additional families to qualify for Pennsylvania’s Child and Dependent Care Enhancement Tax Credit by creating an alternative mechanism for qualification for families using an FSA.  

“This bill doesn’t create a new benefit. It simply fixes an oversight in our original law by creating an alternative eligibility route for these families, ensuring that everyone paying for child care gets a fair chance at relief.?This is about equity and fairness, and it’s about keeping our promise to working parents across the commonwealth,” Hanbidge said. “Child care is not a luxury. It’s a necessity and it’s vital to us having a functional and growing economy. No qualifying family should be left behind.  

“State tax laws meant to benefit working families should not be overly complicated nor set up to exclude families who are using all options available to them to ensure their children are safe and cared for while they work,” she said.   

The bill now heads to the Senate for consideration.