Improving Child Care Worker Retention through Tax Reform by Including Early Childhood Educators in the Educator Expense Deduction

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An essential component of economic development is affordable and accessible early care and education for young children birth to Kindergarten entry. Unfortunately, access to early care and education is uncertain in many places because of severe challenges recruiting and retaining early educators. This is due in large part to low wages and a lack of professional respect that early educators report experiencing. Nationally, early childhood educators earn a median hourly wage of $13.07, less than half that of elementary school teachers, with 13% earning below federal poverty line wages and 43% needing to rely on public assistance for basic needs such as food and healthcare. The result is persistent problems with child care worker recruitment and retention, creating significant employment challenges for businesses and working families that result each year in billions of dollars of lost economic activity.

Including early educators in the Educator Expense Deduction (EED), a federal personal income tax deduction, may be a relatively low-cost way to increase early educator retention by easing a portion of their financial burden and demonstrating that they are respected for the important work they do providing child care to support families and businesses and educating young children. Early childhood educators often are excluded in policies that support K-12 teachers. One clear example is their exclusion from the EED, which allows teachers and other educational staff to claim up to $300 in federal income tax deductions for their unreimbursed purchases of classroom materials and other necessary educational costs.

This policy brief describes the EED and past efforts to include early educators in this tax deduction, presents new research findings regarding the degree to which early educators might utilize an EED, and offers recommendations for federal and state policy.

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