Child Care Tax Credits

There are tax credits at the Federal and/or State level that can benefit families with young children. Read the summaries below for more information. Maine Revenue External site disclaimer Services also has information and application forms on their web site.

Dependent Care Tax Credit

The Maine dependent care state tax credit is equal to 25% of the federal credit for child and dependent care expenses. The credit doubles if the expenses are related to a quality child care provider. This credit is also refundable up to $500.

The Maine legislature passed a law that expands the income tax credit for child care expenses. A Maine taxpayer who enrolls a child in a child care center or home with a Quality Certificate is eligible for a double child care tax credit on their state income tax return. An individual is allowed a credit against the tax otherwise due in the amount of 25% of the federal tax credit allowable for child and dependent care. In the new law, this credit doubles in amount if the child care expenses were incurred through the use of programs with Quality Certificates. The credit may result in a refund of up to $500.

To qualify for the double tax credit, the number from the child care provider's Quality Certificate will need to be entered on a Maine State Income Tax Return. This is not the number on a child care license, but the 3 digit number on a Quality Certificate. Learn more about Quality Certificates.

Earned Income Tax Credit

While the Earned Income Tax Credit is not directly related to child care, it is a way that low-income parents can receive money to pay for child care or other expenses.

This is a refundable Federal tax credit for eligible families who work and have earned income under $32,121 (for a taxpayer with more than one child and meets all other qualifying requirements). The EITC reduces the amount of tax owed and it may result in a refund. Taxpayers can get more information about the Earned Income Tax Credit from the Internal Revenue Service at 1-800-829-1040. Publication 596 describes the EITC and is available at your local IRS office or on-line at External site disclaimer