Senator Hawley introduces “Parent Tax Credit” to assist working parents in starting and raising a family

Josh Hawley Courtesy of Missourinet

U.S. Senator Josh Hawley (R-Mo.) announced legislation to create the Parent Tax Credit, a historic tax cut to help working parents afford to start a family and raise their children. Through a fully refundable tax credit provided directly through automatic, monthly advances, Senator Hawley’s Parent Tax Credit gives working parents the flexibility they need to make the best choices for raising their families. 

“Starting a family and raising children should not be a privilege only reserved for the wealthy. Millions of working people want to start a family and would like to care for their children at home, but current policies do not respect these preferences. American families should be supported, no matter how they choose to care for their kids.”

Senator Josh Hawley

Although most American families believe children are better off when one parent stays home to care for them, current federal childcare programs and policies force both parents into the labor market and require children to be enrolled in formal commercial childcare. Senator Hawley’s legislation creates a fully refundable tax credit of $6,000 for single parents and $12,000 for married parents with qualifying children. 

The Parent Tax Credit

Over the past several decades it has become increasingly difficult for working- and middle-class parents to afford to raise a family. Take childcare: Although most American families believe children are better off when one parent stays home to care for them, often both mom and dad feel they must enter the workforce to be able to afford kids.

Current law doesn’t help. Existing federal childcare programs and policies—such as the Child and Dependent Care Tax Credit—actually require both parents to enter the labor market in order to receive the benefits. These policies also require that children be enrolled in formal commercial childcare. And they frequently reserve the greatest benefits for upper-income earners. Current law does little or nothing for the millions of working families who would prefer to care for their children at home.

Credit Amount

For households with a qualifying child, the Parent Tax Credit is worth $6,000 for single parents and $12,000 for married parents that file a joint tax return. There is no income phase-out. Households that fulfill the eligibility parameters outlined below receive the full benefit. 

Eligibility

The Parent Tax Credit is available to households with a qualifying child under the age of 13. To receive the credit, single-parent households must report prior-year earnings equal to or greater than earned income from 20 hours per week of work at the federal minimum wage, an earnings threshold of $7,540. Married parents that file a joint tax return must reach the same earnings threshold. This creates an explicit marriage bonus of 100 percent. In order to receive the credit, tax returns must include the Social Security Number of parents and qualifying children.

Delivery

Payments are advanced by the IRS on a monthly basis. The IRS is instructed to establish an online portal allowing families to make changes to relevant information, including the number of qualifying children, marital status, and earned income. Families can also choose to opt-out of monthly payments, and can instead receive a lump-sum return when they file their federal taxes.