Established in 1976, the Child and Dependent Care Tax Credit (CDCTC) was enacted to provide tax relief to families to help them pay for child care expenses related to the fact that they are working.

Starting in 1954, Congress provided an itemized deduction for child care expenses in the amount of $600 for the cost of child care for dependent child under the age of 12. This deduction was converted to the CDCTC in 1976. In 2001, the CDCTC was temporarily increased, with this changed being made permanent in 2012. However, unlike the CTC and EITC, the CDCTC is still non-refundable.

The Child and Dependent Care Tax Credit (CDCTC) is a tax credit: 1

• That helps working families pay expenses for the care of children, adult dependents or an incapacitated spouse.

• Families can claim up to $3,000 in dependent care expenses for one child/dependent and $6,000 for two children/dependents per year.

• The credit is worth between 20 percent and 35 percent of these expenses, depending on a family’s income. Eligible families with adjusted gross income (AGI) of $15,000 or less can claim 35 percent of these expenses for a maximum potential credit of $2,100.

• The percentage of expenses a family can claim steadily decreases as income rises, until families with AGI of $43,000 or more reach the minimum claim rate of 20 percent, qualifying for a maximum potential credit of $1,200.

Endnotes

1. https://www.ffyf.org/on-this-day-in-1976-congress-established-the-child-dependent-care-tax-credit/