Tax credits for children and child care touted as helping many Nebraskans

Help with expenses could help families deal with inflation, decide to have children, advocates say

By: - February 8, 2023 6:38 pm
Nebraska State Capitol Building

The Nebraska State Capitol Building in Lincoln. (Rebecca S. Gratz for Nebraska Examiner)

LINCOLN — If Nebraska wants to help address its workforce shortage, it needs to provide more help to families dealing with inflation and  expensive child care bills, a legislative committee was told Wednesday.

Over and over, members of the Legislature’s Revenue Committee were told stories of parents being forced to quit their jobs and remain at home to care for young children because their income wasn’t enough to pay for child care.

Maghie Miller-Jenkins of Lincoln, a married mother of three, said that despite having a degree in human services, she couldn’t find a job that would finance child care bills, which a 2021 state survey pegged at up to $1,500 to $1,600 a month. So she stays home now while her husband works.

‘Parenting is extremely expensive’

Miller-Jenkins said she also cares for an 18-month-old child of a friend, a single mother, who cannot afford child care costs on her fast-food restaurant wages.

“If I didn’t watch her child for free, she couldn’t work,” she said. “Parenting is extremely expensive.”

State Sen. Eliot Bostar of Lincoln (Paul Hammel/Nebraska Examiner)

A trio of bills were presented Wednesday that are designed to help families deal with child care expenses, as well as unexpected expenses, and cost increases caused by inflation.

Legislative Bill 318, introduced by Sen. Eliot Bostar of Lincoln, would provide a tax credit of between $1,000 and $5,000 a year per child, based on family income, for child care costs. The bill also would also provide tax credits for businesses or individuals who contribute to the enhancement of child care operations and a tax break for child care workers.

The high cost of child care, and the loss of providers, is forcing some people out of the workforce, Bostar said, “which is the opposite of what we should be doing.”

Single parents can expend more than half of their income on child care, he said.

Danielle Conrad
State Sen. Danielle Conrad of Lincoln (Craig Chandler/University Communications)

LB 294, sponsored by Lincoln Sen. Danielle Conrad, would provide income tax credits of $1,000 per child, depending on a family’s income. The bill is patterned after a federal tax credit provided to families during the COVID-19 pandemic that supporters said was proven successful in raising millions of children out of poverty.

Conrad said 81% of all children in Nebraska would see benefits from her proposal, which would help families with unexpected expenses as well as child rearing costs.

“I’m not sure we’ll find a better bang for our buck in terms of supporting our families and the economy,” she said.

LB 295, also introduced by Conrad, would increase the state’s current earned income tax credit for working families from the current 10% of the federal credit to 17%.

The senator said it would bring Nebraska more in line with similar tax credits in neighboring states. The credit for one qualifying child would increase from $373 to $635 a year, according to estimates provided by Conrad.

‘It makes work pay’

“It makes work pay,” she said, calling it a “fairly moderate but meaningful investment” in families.

Bostar’s bill was backed by First Five Nebraska, which advocates for early childhood education programs, and was supported by the state’s major business and agriculture organizations.

The state has a high percentage of working parents, according to First Five, with an estimated 75% of Nebraska’s children under age 6 in families with both parents employed.

LB 318 provides a targeted investment for children during a “developmentally important time,” said Elizabeth Everett of First Five.

She and others described the state’s child care system as “broken” because of the loss of providers and 40% turnover of employees.

“Nebraska’s public and private sectors have a common stake in fixing Nebraska’s broken, severely underfunded child care system,” Everett said.  “LB 318 is a meaningful step in that direction.”

Conrad’s child tax credit was backed by Nebraska Appleseed, the OpenSky Policy Institute, the Holland Children’s Movement and the Nebraska State Education Association. At least 10 other states have similar credits, the senator said.

“There is no better way to use the state’s current fiscal surplus than to give it back to our children,” said Diane Amdor of Nebraska Appleseed.

The Nebraska Catholic Conference and the Women’s Fund of Omaha supported all three bills, which saw no opposing testimony.

Could inspire more children

Among the talking points in support of the bills was that increasing tax breaks for families and children could inspire couples to start families.

Concern was expressed over the cost of LB 294, which had an eventual fiscal impact of about $370 million a year.

Conrad, though, said she was open to amendments that would reduce the financial impact by narrowing and reducing the child tax credit.

A similar, pending proposal by Montana’s governor, for instance, provides a $500 credit, and only for children under 6 years of age.

The other two bills had much lower costs. LB 295 had an expected cost of $20 million a year, while the child care tax credit proposal was projected to cost about $34 million annually.

The Revenue Committee took no action on the three bills after their public hearings on Wednesday.

But Elkhorn Sen. Lou Ann Linehan said she hopes to hold an executive session Thursday to begin deciding which tax bills to advance to the full Legislature this year.


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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.