Wisconsin Gov. Evers signs off on massive child tax credit expansion

• Democratic Wisconsin Gov. Tony Evers on Monday signed a Republican-authored bill that significantly expands the state’s child care tax credit.
• The new law expands the Badger State’s child care tax credit to 100% of a claimant’s federal credit.
• According to a post on X (formerly Twitter), Evers gave the go-ahead to double the state’s previous cap because “childcare costs are too high.”

Democratic Gov. Tony Evers on Monday approved a Republican-created bill that would have significantly expanded the state’s child care tax credit, days after vetoing three other Republican bills that would have delivered $800 million in tax cuts. signed the bill.

The governor posted on social media platform X, formerly known as Twitter, that he signed the child care bill because “child care is too expensive.”

In Milwaukee County, the state’s most populous county, the median cost of child care last year was $19,096, about 26% of the median household income of $62,314, according to the U.S. Department of Labor. Dane County, the state’s second most populous county, spent $19,586 last year, about 17.6% of the median household income of $94,813.

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This bill expands the state child care tax credit to 100% of the claimant’s federal child care tax credit. Currently, a filer can only claim her 50% of the federal credit on state taxes. The cap on eligible expenses under the state credit is from her $3,000 to $10,000 if she has one qualifying dependent, and from her $6,000 to $20,000 if she has two or more qualifying dependents. Increase.

The measure is expected to reduce the state’s annual revenue by about $73 million, according to the state Department of Revenue.

The measure was part of a tax cut package introduced by Republicans in January. The bill included an expansion of the child care tax credit. The bill would expand the state’s second income tax bracket to higher income earners, resulting in at least $750 million in annual income tax savings, according to legislative finance analysts. A bill to increase the marriage tax credit. And it’s a bill to expand income deductions for retirees.

Fiscal analysts predicted that the four bills combined would reduce state tax revenue by $2 billion from 2024 to 2025, and about $1.4 billion annually thereafter.

Evers vetoed all bills on Friday except for the child care tax credit expansion, saying the cuts would deplete the state’s reserves.

Evers vetoed a similar Republican tax cut plan in November. During their go-around, Republicans compiled all of their proposals into a comprehensive omnibus bill. This time they split the plan into separate laws.

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The governor also used a partial veto in July to reduce a $3.5 billion income tax cut plan that Republicans included in the state budget to just $175 million, which would be less for the average taxpayer. This equates to a $3 monthly tax reduction for the United States.