- AB 2023 Fact Sheet
- AB 2023 Bill Text
- Options for Modifying the State Child Care Tax Credit - Legislative Analyst's Office
Assembly Bill 2023 (Caballero) will make the Child and Dependent Care Expenses Credit refundable, so that low- and moderate-income working families can benefit from a tax refund to defray the rising cost of child care.
The cost of child care in California is considerably expensive. For many families, child care expenses are the second most significant expense, exceeded only by housing costs. According to recent data, the state’s average annual cost of care in a child care center for an infant is $13,327 and $8,462 for in-home care. Many low- and moderate-income families in California struggle to afford child care and may be unable to work due to the high cost of care.
The California Child and Dependent Care Expenses Credit provides a credit that reimburses families for a portion of their child or dependent care expenses, thereby increasing families’ economic resources and enabling parents to work. In 2011, the state made the Child and Dependent Care Expenses Credit credit nonrefundable due to budget shortfalls. Currently, the credit only provides benefits to families that owe state income tax, which means low-income families are excluded from the current credit. Making the credit refundable again will allow working families who do not owe state income taxes, but who do pay other taxes like sales and property tax, to benefit from a tax refund to offset some of their child care expenses.