State Tax Credits for Dependent Care Expenses

Page Reviewed / Updated - Feb. 2014

The following information has been reviewed and is accurate for the tax year 2013, which is filed in the calendar year 2014.

Definition

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. 

 

How They Work

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.

 

States with Dependent Care Credits

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

  1. Arkansas
  2. California
  3. Colorado
  4. Delaware
  5. District of Columbia
  6. Georgia
  7. Hawaii
  8. Idaho
  9. Iowa
  10. Kansas
  11. Kentucky
  12. Louisiana
  13. Maine
  14. Maryland
  15. Massachusetts
  16. Minnesota
  17. Montana
  18. Nebraska
  19. New Mexico
  20. New York
  21. North Carolina
  22. Ohio
  23. Oklahoma
  24. Oregon
  25. Rhode Island
  26. South Carolina
  27. Vermont
  28. Virginia

 


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.