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SB 1382

An Act amending the act of April 9, 1929 (P.L.343, No.176), known as The Fiscal Code, in Pennsylvania Child and Dependent Care Enhancement Tax Credit Program, further providing for definitions and for credit for child and dependent care employment-related expenses.

2025-2026 Regular Session Introduced by Amanda Cappelletti and 13 co-sponsors

PA SB 1382 updates and aligns the state Child and Dependent Care Tax Credit with federal rules, applying 100% of eligible expenses (subject to caps) times period-specific applicabl

Referred to Finance
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WeVote Research Nonpartisan
Bill Summary · SB 1382

Overview

SB 1382 (Session 2025-2026, Pennsylvania) proposes amendments to The Fiscal Code to modify the Pennsylvania Child and Dependent Care Enhancement Tax Credit Program. The bill focuses on updating definitions related to the credit and adjusting the calculation and applicability of the tax credit for child and dependent care employment-related expenses, aligning Pennsylvania’s program with federal tax credit parameters for certain tax years.

Primary purpose and intent

  • To update and clarify the definitions and mechanics of the Pennsylvania Child and Dependent Care Employment-Related Expense Tax Credit.
  • To determine the credit amount for different tax years and ensure consistency with the corresponding federal child and dependent care credit provisions.
  • To establish new phase-in/phase-out timelines for credit calculations across different taxable year windows.

Key provisions and changes

  • Definition updates:
    • Amends the definition of “applicable percent” in 1602-W to specify the applicable percent for two distinct periods:
    • For taxable years ending before January 1, 2023 (as interpreted under federal rules in effect for the 2021-2022 period).
    • For taxable years beginning after December 31, 2025 (as interpreted under federal rules in effect for the 2025-2026 period).
  • Credit amount calculation (subsections 1603-W(c) and associated new subsection):
    • For taxable years ending before January 1, 2026:
    • The credit equals 100% of the lesser of:
      • The taxpayer’s actual employment-related expenses claimed for the federal Child and Dependent Care Credit (IRC §21) for the prior year or the following year.
      • The applicable limits: $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals.
    • This amount is multiplied by the applicable percent in effect for the taxable year ending before January 1, 2023.
    • For taxable years after December 31, 2025:
    • The credit also equals 100% of the lesser of the same expense amount (federal §21) from the prior or following year.
    • This amount is multiplied by the applicable percent in effect for the taxable year beginning after December 31, 2025 and ending before January 1, 2027.
  • Effective date:
    • The act takes effect 60 days after enactment.

Who would be affected

  • Pennsylvania individual taxpayers who claim the state Child and Dependent Care Employment-Related Expense Tax Credit.
  • Taxpayers with qualifying child or dependent care expenses who claim the federal §21 credit (as the state credit uses those federal figures as a basis).
  • Families with one qualifying individual or two or more qualifying individuals (as defined by the $3,000 and $6,000 expenditure caps).

Procedural and timeline aspects

  • Referred to the Senate Finance Committee for consideration on June 18, 2026.
  • Takes effect 60 days after enactment, with specific credit calculations applying to defined tax-year windows:
    • Periods ending before January 1, 2023 for the applicable percent reference.
    • Periods beginning after December 31, 2025 for the applicable percent reference.
  • The bill clarifies how the credit amount is computed for the relevant taxable years, aligning with the Federal credit framework but applying Pennsylvania’s credit at 100% of eligible expenses (subject to caps) times the applicable percent.

Summary of potential impact

  • Aligns Pennsylvania’s credit methodology with federal standards for determining eligible expenses, while using permanent state-specific caps and a 100% multiplication by the applicable percent.
  • The result could increase or decrease the state credit amount for families depending on their expenses, number of dependents, and the applicable percent in the relevant tax-year window.
  • The phased structure (pre-2023 period vs. post-2025 period) implies transitional considerations for taxpayers with tax years spanning these periods.

If you’d like, I can add a short example calculation illustrating how a taxpayer would compute the Pennsylvania credit under both the pre-2026 and post-2025 provisions.

Compiled from official sources — confirm details with the bill’s official record.

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