Page Reviewed / Updated - Feb. 2014
These are state versions of the Federal Child and Dependent Care Credit in which the tax filer receives a credit for care expenses incurred so that they are able to work. Home care or adult day care costs are examples of work-related expenses that are eligible. Nursing home care and assisted living are examples of expenses which would not be eligible.
Most states simply allow tax filers to deduct a percentage of their federal tax credit from their state tax returns. For example, if the Dependent Care Tax Credit in your state is 50% of the Federal amount and your Federal credit is the maximum $1,050, you can also deduct $525 for your state taxes. Note that many states apply a range of percentages based on your income. For example, instead of 50%, those with higher incomes might be allowed 35% of their Federal credit.
Twenty-eight states have a Dependent Care Credit. The table below includes the income limit, maximum credit amount and the method by which the state calculates the credit amount.
States with Dependent Care Tax Credit 2013
It can be difficult to determine how to structure one’s expenses and choose between the available tax credits and deductions to get the greatest tax savings. Online tax preparation services such as TurboTax Calculators and Tips can greatly facilitate this process as they enable a tax filer to easily examine multiple scenarios and choose the best approach.