North Dakota Senate advances bill to give parents tax credit for day care costs

BISMARCK — The high cost and low availability of child care in North Dakota is enough to keep some parents out of the workforce, but a bipartisan group of legislators say a proposed tax credit for day care costs could help middle-class families while boosting the local labor market.

The state Senate voted 33-14 on Thursday, Feb. 9, to advance Senate Bill 2237 despite a “do not pass” recommendation from the chamber’s Finance and Taxation Committee. The proposal will now head to the House of Representatives.

The legislation sponsored by Senate Minority Leader Kathy Hogan, D-Fargo, would give parents with household incomes under $120,000 an income tax credit to offset certain child care expenses.

The amount parents could get in state tax credits would depend on what they claim on their federal tax returns. Under Hogan’s bill, parents would be able claim state tax credits equal to the greater of:

• 40% of the credit allowed under the federal Child and Dependent Care Credit program, or;
• 10% of the credit allowed under the federal Child Tax Credit.

Hogan told the Republican-led committee last month that her bill aims to help families with incomes between $80,000-120,000 that are generally not eligible for a low-income child care assistance program.

Contributed

Sen. Jonathan Sickler, R-Grand Forks, told colleagues Thursday that the challenge of finding reasonably priced day care has caused many North Dakotans to drop out of the labor market in favor of looking after their children full time. Providing a tax credit to middle-class families would give some stay-at-home parents the financial flexibility to reenter the workforce, Sickler said.

Sen. Dale Patten, R-Watford City, spoke in opposition to the bill Thursday, noting that it would cost the state an estimated $9.9 million in tax revenue over the next two-year budget cycle. He added that several other proposals would tackle North Dakota’s child care shortage.

But bill supporters contended the proposed tax credit is unique because it directly benefits parents. Other legislation under consideration this session would aid day care centers and their employees.

If the bill passes, North Dakota would join 29 other states in having child care tax credits for parents, according to the Committee for Economic Development, a New York-based nonprofit.