Co-Chairs of the Bipartisan Child Care and Pre-K Caucus Call For Updating Tax Provisions to Help Working Families Find and Afford Child Care

Leaders of the Bipartisan Pre-K and Child Care Caucus sent a letter to the Ways and Means Committee, urging their colleagues to update provisions of the United States tax code to strengthen child care. Reps. Suzanne Bonamici (D-OR),  Joaquin Castro (D-TX), and Ashley Hinson (R-IA) are requesting enhancements to four key tax provisions – the Child and Dependent Care Tax Credit, Child Tax Credit, Dependent Care Assistance Program, and Employer Provided Child Care Tax Credit – that will “provide immediate relief for working families and small businesses nationally.” Read the full letter here.

The Caucus’s request joins other proposals that would leverage the tax code to help families afford child care, including the Tax Relief for American Families and Workers Act (Sen. Wyden and Rep. Smith) and the Child Care Investment Act (Reps. Carbajal and Chavez DeRemer). Together these proposals would work to support families, employers, and the economy.

FFYF Executive Director Sarah Rittling released the following statement in response:

 “Families today are struggling to find and afford the child care they need. By updating provisions in the tax code, Congress can better support families with young children while ensuring greater economic stability across the country. We’re so grateful to Reps. Bonamici, Castro, and Hinson for their leadership: This is common sense, it’s bipartisan, and there’s a clear path here that lawmakers can take.”

As the lawmakers wrote to Ways and Means:

“Through these policies we can expand child care supply, incentivize employers to invest in providing child care to their employees, and support parents and their kids. Addressing child care needs is both urgent and bipartisan.”

Why it’s important: Parents are struggling to find and afford child care. The federal tax code has provisions designed to help offset the high cost and increase the supply of high-quality child care , including:  

• The Child and Dependent Care Tax Credit (CDCTC) is the only tax credit designed specifically to help parents offset the cost of child care. 
• The Dependent Care Assistance Program (DCAP) allows some working parents to set aside a small amount of their pre-tax paycheck to pay for child care expenses (including employer-sponsored child care contributions). 
• The Employer-Provided Child Care Credit (known as 45F) supports businesses who want to locate or provide child care for their workforce, while also increasing the number of child care slots available in their community.  
• And the Child Tax Credit is a refund which helps parents afford the everyday expenses of raising children.

Currently, these provisions are extremely limited in their reach, which reduces their ability to help working parents access the quality child care they rely on to be able to go to work. Updating the federal tax code would simultaneously help more parents afford child care while supporting employer efforts to connect employees to child care options.

What happens next: Congress will be considering multiple tax strategies in the coming months. This letter is critical to bringing the proper attention to a bipartisan path forward. When combined with existing sources of federal child care funding, these tax provisions have the potential to improve access to the quality, reliable, affordable child care that families and employers need.

For a full rundown of what these tax provisions do, click here.