Tax and Budget

Tax policy is complicated. Talking about taxes involves jargon, and concepts that can be confusing. For example, what is a 'refundable' tax credit? What exactly does that mean, and how does it help families? We answer these questions here with a quick breakdown of what refundability is and how it impacts families.

What is a "refundable" tax credit?

When a tax credit is refundable, it is available to all families. Even if a family doesn’t owe anything when they file their income taxes, a refundable tax credit makes it possible for them to get money back in the form of a tax refund. Families can then use that money to pay for necessities. 

What is a "non-refundable" tax credit?

A non-refundable tax credit can only ever be used to pay for taxes. If a family doesn’t owe any taxes after deductions, they can’t access any of the tax credit. If the family only owes a little in income taxes, they can only use the non-refundable credit to pay down whatever they owe.

How does refundability impact a family like yours?

In the illustrated example below, the Thompsons have two young children and make a family household income of $39,520 for the year. Based on their income and after deductions, they owe $200 in taxes. Now imagine they qualify for a $500 tax credit. Refundability can greatly impact how much they owe in taxes and whether they'll keep more of their earnings through a refund. 

If the $500 tax credit is non-refundable, it will be applied to offset what the Thompsons owe in taxes. Since they owe $200, the credit will help reduce the amount they owe to $0 – a positive outcome.

However, an even better outcome for young families arises when that $500 tax credit is refundable. If refundable, the $500 tax credit can go towards the amount they owe in taxes ($200) and the remaining amount of $300 would go back to the Thompsons as a refund. This $300 can help with expenses like car repairs, new winter coats for the kids, and baby formula. Though it may not seem like a lot, families facing financial challenges can make good use of this help.

Refundability 101 1

  

To learn more about making Utah’s EITC refundable, go here.

To learn more about making Utah’s CTC refundable, go here.

To read about other refundable tax credits in Utah, go here.

 


Glossary

Tax Credit: a dollar-for-dollar amount that a taxpayer (s) claim on their tax return to reduce the income tax they owe. You can use this to reduce your tax bill and potentially increase your refund amount.

Nonrefundable Tax Credit: reduces the taxes you owe --- allows a taxpayer to only receive a reduction of their tax liability until it reaches zero.

Refundable Tax Credit: allows a taxpayer to receive a refund if the credit they receive is greater than their tax liability.

Tax Policy: policies that determine how we collect taxes.

Published in News & Blog
January 30, 2024

Tax Cuts Hurt Kids

Why Voices Opposes Proposed Income Tax Cuts

Over the past four years, Utah's Legislative Leadership has consistently prioritized tax cuts above the needs of Utah's families. Despite a $400 million tax cut passed last year that benefited the most wealthy Utahns, and now fearmongering about a supposed $130 million budget shortfall, Legislative Leadership is yet again pushing for another $170 million in tax cuts

As the 2024 Legislative Session unfolds, many legislators will claim a need to curb spending and tighten purse strings - that we can’t afford to fully fund social services or any new programs. The question arises: How can we afford $160 million in tax cuts when many crucial needs remain unmet? In a time when working families are struggling to afford groceries, granting more tax cuts to the wealthy is a step in the wrong direction.

Who Benefits from the Proposed Tax Cuts?

The proposed tax cut will help the richest 1% more than anyone. Our analysis shows the proposal will save the bottom 80% of Utah earners between $24 and $107. While the top 1% of Utah earners will save a whopping $2,676. These tax cuts will not provide real help to working families.

Out of the proposed $170 million tax cut, $40 million will go to the top 1% of Utah's wealthiest individuals. In contrast, the bottom 80% will split about $61 million.

The Utah Legislatures 160 Million Tax Cut How much would you get

Note: This image was updated to reflect the changed fiscal note for SB69, increasing the estimate from $160 Million to $170 Million on 2/23/24. 

Utah's Unfair Tax Code

Contrary to the argument that the top 1% pays more in taxes, the reality is that low- and middle-income families bear a higher tax burden. Families making less than $29,900 per year pay 9.8% of their total income in state and local taxes, while the top 1% pays an effective tax rate of only 6.4%.

Why Voices Opposes the Proposed Income Tax Cuts

Voices for Utah Children opposes the proposed tax cuts due to the unmet needs of children and families in Utah. Our income tax should be used to increase funding for education, child care, nutrition, mental health programs, and other services with long-term societal benefits.

The appeal of tax cuts fades when we realize it means losing essential services. Children need us to be their voice, and we need to show up and advocate for their future. It's not just the right thing to do for them; it's a move that benefits all of Utah. Here's why investing in children pays off:

  • Investment in the future: Children are the future, and investing in their well-being leads to positive long-term outcomes. Early childhood interventions improve educational attainment, job prospects, and overall health, benefiting society as a whole. This includes supporting our child care system, which is facing a loss of nearly $600 million in federal support this year.
  • Promoting equality: Programs for children often target low-income families and disadvantaged communities, narrowing the gap in opportunities and promoting a fairer society. Access to quality education, healthcare, and essential services can break the cycle of poverty, creating an even playing field for every child.
  • Stimulating the economy: A healthy, educated population contributes to a stronger economy. Investments in children's programs create a ripple effect, boosting productivity, encouraging innovation, and fostering economic growth in the long run.

We need to hit pause on tax cuts and instead acknowledge that investing in children is the better path to follow. It will lead to a stronger and more prosperous Utah, and those benefits will far outweigh any tax cut currently being considered. 

Published in News & Blog

Utah’s family demographics have changed. 53% of Utah families have all available parents in the workforce, making child care a necessity. These days, most Utah families need two incomes to maintain financial stability. But Utah’s licensed child care system struggles to meet the demand. Licensed child care program capacity is only sufficient to serve about 36% of all children under six whose parents are working.

To provide a comprehensive picture of Utah's current child care crisis, this report produced by Voices for Utah Children examines the availability of licensed child care across the state, and in each individual county. By conducting a detailed analysis of both the demand and supply of child care services, the report aims to provide policymakers and the public with a clear understanding of the urgent need for child care reform.

Download a copy of the report here.

County-Level Data

Child Care Access Data Fact Sheets by County are also available on our Utah Care for Kids website. Look up child care access in your county today!

Look Up County

 

Statewide Data

Children Potentially in Need of Care

 
All Children Under 6 Years Old 289,240
Children Under 6 Years Potentially in Need of Care 154,229
 Rate of Children Under 6 with Potential Child Care Needs 53%

Licensed Child Care Programming

 
Home-based Child Care Programs 940 
Center-based Child Care Programs 427 
Total Licensed Slots 54,804 
Percent of Child Care Need Met 36%

Cost of Care for Families

 
Average Annual Cost Home-based Child Care for Infant/Toddler $8,267
Average Annual Cost Center-based Child Care for Infant/Toddler $11,232
Average Annual Cost Home-based Child Care for Preschool-Aged Child $7,311
Average Annual Cost Center-based Child Care for Preschool-Aged Child $8,487
Number of Children Eligible for Subsidies  81,805
Number of Children Receiving Subsidies  11,665
Rate of Eligible Children Receiving Subsidies 14%

Child Care Workforce Compensation

 
Median Hourly Wage for Child Care Professionals $12.87 
Median Annual Salary for Child Care Professionals $26,770 

 

Takeaways

There is insufficient licensed child care in Utah to meet the needs of working families.

There are more than 154,000 children under the age of six living in Utah with all available parents in the workforce. But, there are only 54,804 licensed child care spots in 1,367 programs statewide. Licensed child care program capacity is only sufficient to serve about 36% of all children under six whose parents are working. That means the working families of nearly two-thirds of Utah’s youngest children must rely on alternate arrangements (such as utilizing family members, hiring or sharing a nanny, alternating parent work schedules, using unlicensed child care providers, or some combination of these).

The high cost of child care makes it even less accessible to low- and middle-income families, and rural families struggle most.

Affordability remains a significant hurdle with child care costs often consuming a substantial portion of a family’s income. The U.S. Department of Health and Human Services defines affordable child care as care that costs no more than 7% of a family's income. In Utah, the average annual cost of care for two children under the age of six (one infant, one preschool-aged child is $16,890, taking up about 17% of family’s income. For a family in rural Grand County, the cost of that care is actually higher at $17,339, consuming 41% of their income. The lack of dramatic differences in child care prices from county to county is an illustration of how little flexibility providers have to reduce tuition costs for parents, even in areas of the state where family incomes clearly can’t keep up.

 How costs play out for a typical four-person family with one infant/toddler and one preschool-aged child

 
Median Four-Person Family Household Income $100,752
Average Annual Cost of Toddler/Infant Care $9,193
Average Annual Cost of Preschool-Aged Care $7,678
Considered "Affordable" Child Care for this Family  $7,053
Average Amount this Family Will Spend on Child Care $16,871
Percent of Income this Family Will Spend on Child Care 17%

Licensed child care is insufficient in every county in Utah, though the level of unmet need varies from place to place.

Summit County emerges as the county with the highest percentage of child care need met (54%), followed by Carbon, (48%) Sevier (45%), Grand (45%), Salt Lake (45%), and Iron Counties (41%). All other counties have less than 40% of child care need met with licensed program capacity, and multiple rural counties (Daggett, Piute, Rich, and Wayne) have no licensed child care available at all.

With substantial public investment, Utah’s child care system has grown 31% since the start of the COVID pandemic.

Through various federal funding streams, nearly $600 million has worked to grow Utah’s child care capacity from approximately 42,000 licensed slots in March 2020 to over 54,000 in August 2023. In contrast to many other states, Utah has managed to increase its licensed child care capacity - despite substantial pandemic disruptions - through stabilization grants paid directly to existing providers for wage supplementation, startup support for new programs, and a one-time worker bonus of $2,000 per child care professional. These financial investments both expanded the enrollment capacities of existing programs as well as recruited new providers into the sector. However, with the ending of this funding in October 2023, Utah risks jeopardizing this incredible progress.

Recommendations

1. Commit to Public Investment in Child Care

Utah’s child care crisis requires public investment. Funding is needed to bridge the gap between what families can afford and the true cost of care. While businesses can contribute, their capacity to address this crisis is limited. There is no sufficient source of investment to address child care’s market failure aside from public funding. Child care should be valued in the same ways as the public education system, ensuring equal access and opportunities for all children. Currently, the burden of expensive early education falls largely on Utah families, with minimal public support, even though most brain development occurs before age six.

2. Help Parents Afford the Care They Want

Utah’s current child care system doesn’t promote parent choice. Child care affordability and accessibility severely limit family choice when it comes to child care, forcing decisions based on cost or access, rather than preference. This also impacts family planning and career choices. Parents are forced to make difficult choices, such as changing jobs, adjusting school and work schedules, or choosing suboptimal child care situations. To address these issues, policymakers should consider improving the child care subsidy program, expanding the child tax credit, and finding ways to help alleviate the financial burden on Utah families.

3. Support the Critical Work of Child Care Professionals

Child care professionals face significant financial challenges. Low wages and a lack of benefits, including healthcare and retirement, have made the profession unsustainable, leading to high rates of turnover each year. Since Utah’s current child care system only meets 36% of the state's need, Utah must invest in the early child care profession to attract and retain a robust workforce. To support child care providers, policymakers should consider measures including state funding of Child Care Stabilization Grants, wage supplement programs, eliminating barriers to licensure, and increasing access to employment benefits.

For questions or inquiries regarding this report, please contact Voices staff members: 

Published in News & Blog

Child care certainly received its fair share of discussion this legislative session, but did anything really happen? The short answer is kinda. Here’s what happened.

Funding Requests

During the session, Voices for Utah Children teamed up with parents, child care professionals, and early childhood advocates to lobby the state legislature for more than $260 million to stabilize Utah’s child care system. This was, admittedly, a big ask. But the requests highlighted the reality of the child care sector’s needs. Many of the state funding requests aimed to replace expiring federal pandemic money that has been propping up the sector. This emergency federal funding will begin to end in June 2023 and will fully expire by June 2024. 

Child Care Stabilization Grants, Rep. Andrew Stoddard
Federal Child Care Stabilization Grants have been a lifeline for Utah's child care sector. Child care providers have indicated the lack of ongoing stabilization funding will result in one or more of the following three outcomes: child care programs will close, tuition will be raised for families, and/or employees will have lower wages. This funding would have allowed for a one-year extension of the stabilization grants currently received by hundreds of child care providers in Utah. 
Requested: $216 Million
Outcome: NOT FUNDED

Retention Incentives for Early Childhood Professionals, Sen. Luz Escamilla
In 2022, federal funding allowed Utah's Office of Child Care issued $2,000 bonuses to eligible workers serving in child care positions to provide recognition for their critical work throughout the COVID pandemic and to improve retention within the field. 9,368 child care professionals received retention incentives through this program. This funding request would have continued this incentive program for an additional two years while structural reforms were pursued. 
Requested: $38 Million
Outcome: NOT FUNDED

Regional Child Care Development Grants, Rep. Ashlee Matthews 
Through federal funding, Utah's six Regional Care about Child Care Resource & Referral Agencies supported new programs for rural outreach, small business training, start-up grants, and professional development. This funding would have continued these grants for another three years to continue programming that works to expand child care access and improve care in both rural and urban areas.
Requested: $2.1 Million
Outcome: NOT FUNDED

Child Care Licensing-Related Fees, Rep. Ashlee Matthews
With COVID-relief funding, the Office of Child Care Licensing has waived the fees associated with licensing in order to lessen the barriers to expanding, maintaining, and opening new child care programs. This funding would have extended this fee coverage for another three years as the state tackles the child care crisis. 
Requested: $3 Million
Outcome: NOT FUNDED

Child Care Solutions and Workforce Productivity Plan, Sen. Luz Escamilla
A priority of the Governor’s Office of Economic Opportunity’s Women in the Economy  Subcommittee, these funds will support strategic planning for child care solutions.
Requested: $250,000
Outcome: $150,000

Legislation

HB 167: State Child Care, Rep. Ashlee Matthews & Sen. Luz Escamilla
This bill provides the framework for State agencies to convert empty state buildings to on-site child care. It will allow private providers to rent the space and operate from the facility, creating greater access to child care for employees and the greater community.
Outcome: PASSED

HB 170: Child Tax Credit Revisions, Rep. Susan Pulsipher & Sen. Daniel McCay
This bill provides a non-refundable yearly tax credit of $1,000 per child between the ages of 1-3 for families making up to $43,000 for single filers and $54,000 for households filing married jointly. Because the bill’s original intent was to help with the cost of child care, we’d like to see this expanded to help children ages 0-6, as it did in the original bill. This legislation makes Utah the 13th state with its very own state child tax credit.
Outcome: AMENDED VERSION PASSED 

HB 282: Child Care Sales Tax Exemption, Rep. Christine Watkins
This bill would have allowed for a sales and use tax exemption for construction materials used to construct or expand a child care program.
Outcome: BILL NEVER HEARD IN COMMITTEE

Advocacy

While our policy wins feel small, it was a stellar year for child care advocacy. We hosted our first Child Care Advocacy Day, where we welcomed over 100 parents, kiddos, providers, and supporters of child care in Utah’s Capitol Rotunda! The turnout far surpassed expectations and we hosted many new faces. We look forward to continuing to grow our network of child care advocates and working on solutions to child care during the interim. 

  

To learn more about child care advocacy in Utah, visit UtahCareforKids.org.

Published in News & Blog

The Legislature finished its 2023 General Session last Friday evening, March 3rd. In the area of tax policy, we've prepared the chart above to summarize the tax cuts passed this year. 

The tax cuts that will go into effect in the next year add up to $408 million. Three-fifth of that amount goes to the highest-earning one-fifth of Utahns, and four-fifths goes to the top two-fifths. That leaves just one-fifth for the 60% of Utahns earning under $92,000. Unfortunately, these changes do nothing to improve the overall regressivity of Utah's current tax structure

The picture improves slightly if we count the $200 million elimination of the state sales tax on unprepared food. Because the food tax is the most regressive element of our most regressive tax, removing it does reduce (but not eliminate) the regressivity in Utah's tax structure. (This part of HB 54 will only go into effect in 2025 if voters approve a Constitutional amendment ending the earmarking of income tax for education in November 2024. That earmark was broadened in 1996 to add higher education and again in 2020 via Amendment G to add all programs for children and for disabled Utahns to the permitted uses of income tax revenues.)

To clarify, we consider Utah's overall tax structure to be regressive because the highest income Utahns pay the lowest share of their incomes in state and local taxes, based on the analysis at www.ITEP.org/WhoPays/Utah

We welcome the proposed elimination of the grocery tax and the reduced regressivity it would bring, especially since it benefits all low-income Utahns, including the considerable number who never file a tax return. We also welcome the much smaller but still beneficial impacts of the new non-refundable Child Tax Credit (CTC) and slightly expanded non-refundable Earned Income Tax Credit (EITC). Here are some specifics on those: 

  • Elimination of the $200 million state grocery tax reduces taxes on the lowest-income fifth of Utahns (those earning under $31,000) by $18 million, and it reduces taxes on the lowest-income two-fifths (those earning under $59,000) by a total of $48 million.
  • The new Child Tax Credit (CTC) reduces taxes for those same two-fifths of Utahns by $9 million. It also makes Utah the 13th state with our own CTC, though NCSL's website indicates that ours will be one of just four that are non-refundable. 
  • The slightly expanded Utah EITC adds a reduction of $1 million for the low- and moderate-income 40% of Utahns. Sadly, it still excludes the lowest-income 80-90% of Utah's federal EITC recipients because it remains non-refundable.

Those three tax reductions add up to $58 million for low- and moderate-income Utahns, which means that less than 10% of the overall tax cut reaches the 40% of the population that needs it most. (For more about why refundability is critical for the effectiveness of family tax credits like the ETC and CTC, please visit https://www.utahfamilytaxcredits.org/learnmore/.)

Unfortunately, the majority of the $608 million in tax cuts goes to Utahns earning six-figure incomes, who neither need nor are asking for tax cuts. In fact, the survey conducted during the legislative session by the Deseret News and Hinckley Institute found that just 18% of Utahns wanted a tax cut. The overwhelming majority supported investing more in education, infrastructure, saving the Great Salt Lake, and other building blocks of Utah's future prosperity and success: 

DN tax cut poll vertical 2 23 higherqaulity

 This result is consistent with previous polling on the question of whether Utah should be cutting taxes. Previous polls include....

Clearly the public is more concerned than Utah's political leaders about the billions of dollars in unmet needs identified by the Invest In Utah's Future coalition. The public is probably also aware of the two biggest problems with cutting the income tax: 

  1. Cutting the income tax leads to higher property taxes as the local districts struggle to make up the lost education revenues. And in fact, the last 14 years have seen inflation-adjusted per-student local education revenue (from property taxes) rise 12% while inflation-adjusted per-student state funding (from the income tax) fell 2.5%. Given the spike in local property taxes in the last year or two, it was disappointing to see that the Legislature failed to pass even very modest measures like HB 260 that would have devoted $5 million to expand eligibility for the state's property tax relief programs to more low- and moderate-income households. 
  2.  Cutting $400 million from the income tax breaks down to well over $500 per student diverted from the main source of education funding. For the median income family of four, they gain about $200 in tax cuts -- but lose over $1,000 that now will not be invested every year in their own kids' education. 

Unfortunately, the Utah Legislature has proven once again that it is all too ready to give in to the tax cut temptation, even though Utah already has the 7th lowest taxes in the nation according to WalletHub, and despite the fact that we are already a top 10 state nationally for our business-friendly taxes, according to the Tax Foundation

           *****           *****         *****          ******

WE'VE POSTED A VIDEO WALK-THROUGH OF THE CHART ABOVE AT https://fb.watch/jcAUe4-Rqr/ 

 

 

Published in News & Blog

To date, the state legislature’s minimal efforts to address Utah’s complex child care crisis are completely out of proportion to the scope of the problem

None of those efforts have offered much relief for Utah families with young children who are struggling with the rising cost of child care. They certainly don’t contemplate the urgency of the impending “federal funding cliff” that is about to push child care costs even further through the roof. 

Policy proposals that require a meaningful investment of state dollars - and pretty much all the effective ones will - have been ignored by elected officials. 

Before the session ends on March 3rd, however, the legislature has a chance to pass legislation that would actually provide financial relief for some families with young children. 

Yes, it will require state investment - but the one kind of investment that legislators seem most enthusiastic about: a tax cut!

Well, a tax CREDIT, which is sort of like a tax cut for the Utahns who qualify. 

Representative Susan Pulsipher (R-South Jordan) has introduced a narrowly-tailored Child Tax Credit, which would allow families to claim up to an extra $1,000 per child each year, to help cover a small portion of the staggering costs of caring for a child. Families that make more money can claim a smaller amount, on a sliding scale. 

The bill is House Bill 170: Child Tax Credit Amendments (originally named "Child Care Tax Credit Amendments). It has only recently moved forward in the legislative process, after its initial introduction in mid-January. With just a couple of weeks left in the session, there is still a chance that this tax credit - with a price tag of less than $41 million - could be included in whatever tax package the legislature inevitably passes. 

Rep. Pulsipher’s goal is to help families who still struggle to afford the costs of raising young children. 

The money they save with this tax credit can be used by families in any way that works for them. If a parent stays home, it can help cushion the financial burden of having a one-income household. If both parents work, it can be used to cover the costs of child care while they are working. 

There are a few catches, though:

  • This $1,000 tax credit can only be claimed for children who are under the age of six at the time you file your taxes. Child care costs go way down for a family once a child is enrolled in school. 
  • In order to be eligible, your household must meet certain household income requirements (for example, a household with a joint filing status must be less than $54,000 to quality for the full amount of the credit).
  • If your family makes more than a certain amount of money, you can still claim this tax credit, but it is phased out based on your household income. 
  • If you don’t end up owing any income taxes when all the math is said and done, you won’t get a check in the mail from the state for each child. This tax credit would be “non-refundable.” That means the tax credit can only be used to put a dent in the income taxes you owe; it can’t put extra money in your pocket if your income taxes calculate down to zero. 
  • You won’t be able to claim the tax credit THIS YEAR. Or even next year. It would go into effect when you file your 2024 taxes in 2025. 

Even with these strict parameters, we think having a Child Tax Credit available for some Utah families is a great step toward grappling with our state’s child care problems in a meaningful way. 

HB170 offers legislators an opportunity to show they are willing to invest in families with young children in the face of a crisis that is about to get a lot worse. We hope they take it!

Write to your legislators about HB170 “Child Tax Credit Amendments!”

Published in News & Blog
November 14, 2023

Utah's State Child Tax Credit

As many Utahns experienced firsthand during the pandemic, a generous child tax credit (CTC) can make a world of difference for families raising young children. During this challenging time, the CTC was temporarily expanded and made refundable, granting families $300 per month per child under six and $250 per child aged six to seventeen – providing significant tax relief for working families. This expansion had a far-reaching impact, reducing child poverty to its lowest recorded level in 2021, dropping by 46% from 9.7% in 2020 to 5.2% in 2021. Unfortunately, a year after the expansion ended, child poverty returned to 12.4%. In Utah, the federal CTC expansion helped lift 32,000 children from poverty.

In 2023, Utah became the 13th state to introduce its very own child tax credit, thanks to the leadership of Representative Susan Pulsipher. Like the federal child tax credit, a state-level child tax credit is intended to help families with the costs of raising children. 

As Utah’s legislators prepare for the 2024 legislative session, they should consider meaningful ways to expand Utah’s child tax credit to ensure it provides real support for families.

How it Works

Utah’s narrowly tailored Child Tax Credit allows some families to claim up to an additional $1,000 per child each year. Whether a parent stays home or both parents work, this tax credit can provide much-needed financial support.

Who is Eligible

  • This $1,000 tax credit is for children who are ages 1-3 on the last day of the claimant’s taxable year.

  • There are household income requirements. Families with an income of $54,000 for a couple or $43,000 for a family with a single parent (also called Head of Household) can claim the credit.

  • If a family makes more than a certain amount of money, they can still claim this tax credit, but it is phased out based on household income. 

It's important to note that Utah's CTC is non-refundable. It can only be used to help reduce the amount of income taxes you owe but Utah’s CTC doesn’t help any families whose income tax burden is zero.  [For more information on refundability, go here.]

Who it Helps

Utah's CTC won't take effect until families file their 2024 taxes in 2025. According to an analysis from the Institute on Taxation and Economic Policy (ITEP):

  • 1.4% of households in Utah will benefit from the state CTC.
  • Among those eligible, the average annual tax savings will be around $400.
  • 4.3% of children will benefit from the CTC. 
  • No family will receive the full $1,000 per child. 

Looking Ahead

Utah’s narrowly-tailored CTC doesn’t serve enough families. With its restrictions, the current state CTC doesn’t really help low- and middle-income households, especially those with more children. It also leaves out families with newborns and kids aged four to eighteen. Many more families could be helped by expanding our state child tax credit. 

A bold state child tax credit gives Utah parents opportunities and choices to set their children up for future success. Children need parents to give them a solid start in life - and parents need the support of their community to be there for their kids. Expanding our state CTC gives critical community support to young parents raising children in Utah. 

Edit: ITEP Analysis numbers were updated on November 21, 2023, to use estimations based on 2024 incomes. 

Published in News & Blog

In 2023, Utah introduced its own child tax credit (CTC) marking a positive step forward. However, the credit's limited scope falls short of providing real assistance to families raising young children. As we approach the 2024 legislative session, there is a crucial opportunity for lawmakers to make meaningful changes and expand the CTC to better serve Utah families.

The current $1,000 child tax credit is for families with children ages 1-3 with an income of $54,000 for a couple or $43,000 for a family with a single parent. Under the current child tax credit, 1.4% of families and 4.3% of children benefit. For those eligible, the average tax credit is $400.

Here's how expansion could impact families:

  Percent of Families Benefiting Percent of Children Benefiting Avg Tax Cut
(per eligible household)
Current Child Tax Credit 1.4% 4.3%  $400 
Original 2024 Legislative Proposal
HB 153 expands credit to 4- and 5-year-olds
2.9%  8.9%  $599 
Current 2024 Legislative Proposal
HB 153 2nd Substitute expands credit to 4-year-olds (and adds dangerous child care licensing changes)
1.8% 5.4% $456

Meaningful Expansion
Make credit available to low-income families (refundable) and children between birth and age five

7.2%  21.7%  $1,298 

Key Recommendations

  1. The credit should be available to families with children from birth to 5 years (adding newborns, 4-year-olds, and 5-year-olds). 
    The first five years of a child's life are the most financially demanding for parents. Diapers, clothing, formula, and child care costs create a significant burden. Expanding the credit to all children aged 0-5 acknowledges the unique financial challenges faced by families during these crucial early years.

  2. The credit should be refundable.
    Utah's current CTC is non-refundable, limiting its impact. Making the CTC refundable would mean that even if a family doesn’t owe income tax after credits and deductions, they could receive the credit through a tax refund. A refundable CTC ensures that low- and middle-income families—who pay sales and other taxes but have little or no income tax liability—can still benefit from the CTC. Because our current CTC is non-refundable, our analysis shows that currently, no families receive the full $1,000/per child benefit. Eleven of the 14 states with a child tax credit have structured their CTCs to be refundable. If a family makes more than a certain amount of money, they can still claim this tax credit, but it is phased out based on household income. 

What are elected officials considering this year for child tax credit expansion?

For the 2024 legislative session, Representative Susan Pulsipher has introduced legislation making 4- and 5-year-old children eligible for the CTC, therefore expanding the age range to children ages 1-5 (but still excluding newborns). Governor Spencer Cox’s proposed budget also advocates for this change.

While we support this first step, we strongly recommend a more comprehensive, impactful approach. We recommend making the tax credit available for families with any child between birth and age five. Additionally, the CTC should be made refundable, ensuring that all families receive the full benefit of $1,000/per child. This expansion would create more substantial financial relief for families.

With the CTC’s current limitations, this tax credit is not functioning as a genuine support for families bearing the cost of raising young children. By making the credit refundable and extending eligibility to cover children ages 0-5, the state has the opportunity to create a more meaningful child tax credit that aligns with the financial realities faced by families.

NOTE: As of January 25th, there has been a damaging change to HB 153. An adopted substitute includes dangerous changes to child care quality expectations, allowing unlicensed people to watch even more kids without safety training or home inspections. This step backward is bad for kids, does nothing to solve our child care issues in Utah, and absolutely should not be wedged into a Child Tax Credit bill. Read about why we oppose this bill here. 

Learn more about Utah's Child Tax Credit here 

 

Published in News & Blog

Representative Susan Pulsipher’s HB 153 was initially aimed at providing tax relief for families with young children through an expanded state child tax credit. Originally, the bill aimed to extend the child tax credit eligibility from ages one to three to ages one to five. We considered this original bill to be a top Voices for Utah Children priority. Unfortunately, during the session the bill was hijacked and an adopted substitute now adds a damaging provision allowing unlicensed child care providers to look after up to 8 children without safety training or home inspections.

While we appreciate the expanded background check measures and child ratio requirement for children under 3 for unlicensed providers, the bill lacks enforcement provisions for those operating without checks or failing them, as well as for existing unlicensed providers.

Why We Oppose HB 153 S03

This change jeopardizes the safety of Utah children by permitting unlicensed providers, without CPR and First Aid training or home inspections, to care for more children without oversight. This bill does not increase capacity for licensed family child care providers, rather, it specifically allows unlicensed individuals to watch more children.

Addressing child care licensing standards within a tax code bill is inappropriate. While expanding Utah’s Child Tax Credit was a key priority, it does not belong in the same bill that seeks to lower standards for child care quality.

Utah has seen previous attempts to increase the number of children allowed in unlicensed care. In 2021, HB 271 attempted to increase the number of children an unregulated provider could care for from 4 to 6. While it failed, it resurfaced in 2022 under HB 15, passing despite extensive opposition from providers and child safety groups, including Voices for Utah Children. HB 153 S03 takes this effort a step further by increasing the number of children from 6 to 8.

Why HB 153 S03 is Dangerous

This proposal disempowers parents, grandparents, foster parents, and working adults seeking safe child care options for their children. The lack of oversight and transparency in under-the-radar child care puts families in a precarious position, unable to access vital information about providers (e.g. verified background checks, safety violations and complaints, and guaranteed levels of basic safety training). While we appreciate the added provisions requiring background checks for unlicensed providers, the bill lacks enforcement and does not specify whether background check results will be available to the public.

Homeowners insurance doesn't cover providers caring for more than four unrelated children, and providers cannot access outside liability insurance without a license, leaving parents with minimal legal recourse if their child is hurt, injured, or killed while in care.

This change would solidify Utah’s place as the second-worst state nationally in this aspect, with only South Dakota allowing higher unregulated care capacity. If Utah is supposed to be a state that is good for kids and families, this bill sets us back. 

Why HB 153 S03 Doesn’t Help Fix the Child Care Crisis

Many child care experts predict that this change would actually decrease the supply of available child care in Utah. This proposal could incentivize some programs to reduce their size and drop their licenses, leaving fewer families with access to any care. 

Many proposals have been made to address Utah’s child care crisis, but lowering standards for the people who care for children is not, and should not be, one of them. This is not requested or supported by early care and learning professionals and experts. Parents seek easier access to good, affordable child care with certainty that their children are safe, happy, healthy, and learning. Parents and providers want the state to prioritize the well-being of Utah’s children, rather than advancing simplified policy proposals that divert attention from the genuine problem-solving needed to address the child care crisis.

What About Supporting the Child Tax Credit?

Although HB 153 was initially one of our priority pieces of legislation, the recent licensing changes have led us to withdraw our support for this bill. Originally, the bill only made incremental expansions to the child tax credit, but with the adoption of the third substitute, eligibility for 5-year-olds was removed, effectively cutting the expansion in half. Our analysis indicates that HB 153 S03 will only extend the credit to 0.4% more families, which is insufficient. The proposed changes to childcare licensing are concerning and not worth the marginal increase in tax credit eligibility. Voices for Utah Children believes it's preferable to either revert to the original bill or forego its passage entirely. Moving forward, we will focus on advocating for a more comprehensive child tax credit without compromising on childcare safety standards.

Note: HB 153 passed on February 29, 2024. For more information on this complex bill we created an FAQ to address questions about the passed bill and explain its significant implications.

FAQs on HB 153: Child Care Revisions

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