Politics

Middle class family cheers President's plan to triple Child Care Tax Credit

Deepa Fernandes / KPCC

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Among the breaks for the middle class President Obama proposed during his State of the Union address Tuesday, the one insiders said Republicans are most likely to pass is a bigger tax break for child care.

The president wants to triple the Child Care Tax Credit to $3,000 per child.

And that's music to Audrey Dow's ears.

She and her husband Stephen will spend more than $25,000 this year in child care costs for their four children. If it passes, she said, it would be a big relief.

"It means that we can maybe live in a way that’s not paycheck to paycheck," said Dow, a non-profit executive who lives in Hacienda Heights.

California is one of the least affordable states for working parents. The average cost of full time child care for an infant is more than $12,000 per year per child.

For preschoolers, it costs more than $8,000 per year.

Child care costs for preschools and infants eat up 10-14 percent of the median family income in California, according to Child Care Aware of America.

For families in the U.S. with both an infant and a preschooler in daycare, childcare costs amount to nearly $18,000 per year on average, becoming a family's top expense, surpassing even housing, according to the Bureau of Labor Statistics. 

The President's plan would reduce a family's income tax burden and would only apply to children under the age of 5. It would also phase out for families making more than $120,000 per year.

Stephen Dow had been the primary caregiver for the family's four children. When he took a full-time job recently, he and his wife were pleased.

After some careful math, the Dows realized just how significant child care costs would cut into his new 80,000-a-year salary.

"The fact of the matter is, him working a full time job is only going to make a slight (financial) improvement," Audrey Dow said. "The reality is that, because the costs of child care are so high, it's not going to have the big impact that a two-person working family should have. It wont have that benefit of two strong incomes coming to the house because of all the money going out the door."

The President's plan would save the Dows $4,000 in taxes, since they have two children under the age of 5 in daycare.

It would help them not just make ends meet - but also pay off debt.