Federal Tax Benefits for Child Care: Progressivity Over Time, EGTRRA, and the Alternative Minimum Tax

A BEJEAP Topics article. Abstract This paper examines the progressivity of tax benefits for child care over time. We find that the Child and Dependent Care Tax Credit (CDCTC) became more progressive between 1989 and 1998. However, total tax benefits for child care, which include the employer exclusion for child care, were less progressive than the CDCTC alone and became less progressive over time. In simple simulations using 1998 data as the base, we find that the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) increases the progressivity of the CDCTC and total tax benefits for child care. Submitted: August 13, 2003 · Accepted: November 23, 2003 · Published: November 25, 2003 Originally published in Topics in Economic Analysis & Policy. Recommended Citation Eiler, John R. and Hrung, Warren B. (2003) "Federal Tax Benefits for Child Care: Progressivity Over Time, EGTRRA, and the Alternative Minimum Tax," Topics in Economic Analysis & Policy: Vol. 3 : Iss. 1, Article 16. Available at: http://www.bepress.com/bejeap/topics/vol3/iss1/art16