Programs and Tax Credits to Help Pay for Child Care

Child care is essential for working parents, but paying for care is a challenge.

Here is some important information about programs and tax credits that may be able to help working parents pay for child care.

Maryland Child Care Scholarship Program

This scholarship program is offered by the State of Maryland to help eligible families pay for child care while parents work, attend school, or participate in job-training programs.

The program offers a subsidy for care provided by regulated child care centers and family child care providers participating in the Maryland EXCELS program, or care provided in informal care settings.

For eligibility guidelines, including income thresholds, and information on how to apply, visit this page: Child Care Scholarship Program

This overview of the Child Care Scholarship Program by the Maryland Family Network is a helpful guide for understanding how the program works and how to apply.

Working Parents Assistance Program

The Montgomery County Department of Health and Human Services can assist eligible families by contributing to the cost of child care through the County-funded Working Parents Assistance (WPA) Program.

Income guidelines for this program were recently increased to allow more families to be eligible for assistance.

To qualify, all applicants must work and/or attend school at least 25 hours per week and meet current income requirements. Parents complete an application for the WPA program and a caseworker determines eligibility, based on income. Families whose income is under scale for WPA will be referred to complete an application for the Maryland Child Care Scholarship Program (see previous item).

For eligibility guidelines, including income thresholds, and information on how to apply, start here: Working Parents Assistance Program

Head Start and Public Prekindergarten

Head Start and Prekindergarten are early education options for families with low incomes.

Montgomery County Public Schools (MCPS) operates more than 30 Head Start programs, most of which are full-day. These Head Start programs serve 4-year-olds and a limited number of 3-year-olds. Head Start is federally funded and families must meet federal poverty income guidelines.

MCPS offers public Prekindergarten (PreK) at around 60 schools. Most of these PreK programs are half-day, but a few are full-day. PreK is for 4-year-olds, and it provides experiences to help children develop and maintain the skills, knowledge, and behaviors necessary to be successful in school. In addition, the Maryland State Department of Education has approved nine community-based full-day PreK programs in Montgomery County. To be eligible for PreK programs, families must meet specific low-income guidelines.

Click here for more details about Head Start and PreK programs, income eligibility, and how to apply.

Federal Child and Dependent Care Tax Credit

Parents who pay someone to take care of their children while they work may be able to claim this tax credit on their federal taxes. The credit gives back a portion of the money spent on care.  

This is a tax credit, not a tax deduction, which means it can reduce taxes owed on a “dollar for dollar” basis, and it can reduce one’s federal tax bill by hundreds or even thousands of dollars. In addition, parents with higher incomes may also qualify for this credit. The credit does get smaller with higher incomes, but there is not an income cutoff. 

See the following IRS pages for more information:

Maryland Child and Dependent Care Tax Credit

Taxpayers who are eligible for a Child and Dependent Care Credit on their federal income tax return may be entitled to a credit on their Maryland state income tax return. Please note that this tax credit is different than (and in addition to) the state subtraction benefit for child care that reduces taxable income.  

The Maryland Child and Dependent Care Tax Credit was recently expanded. Starting with the 2019 tax year, it is available to taxpayers at higher income levels than in the past. Also, the current income thresholds for this tax credit will be indexed for inflation.  

For information on eligibility, including income thresholds, and how to claim this tax credit, start here: Child and Dependent Care Tax Credit

Subsidy for Federal Employees

FEEA Childcare Services partners with nearly 20 federal agencies to administer Congressionally-authorized child care subsidy programs.

See the FEEA Childcare Subsidies web page for a list of the current participating agencies and to download a brochure with details about the program and how to apply.

Military Subsidy Programs

Child Care Aware of America provides information on child care subsidies available for members of the military. Visit this page and choose the branch of the military and learn more about eligible programs and assistance.

Child Care Aware

This is a national child care consumer education website, with a wide range of information for parents and child care providers.

The following sections of the Child Care Aware site may be helpful for families struggling with child care costs: Paying for Child Care and Budgeting for Child Care.

Case Study

Supporting Work-Life Balance for Working Parents

Chevo Consulting, LLC, in Rockville, Maryland, prides itself on providing a supportive, family-friendly culture. As part of its benefits package, this management consulting firm offers a Dependent Care Flexible Spending Account (FSA).