STATEMENT: FFYF’s Sarah Rittling on proposed expansion of child care tax credits

On Monday afternoon, the Senate released the text of their bill to reauthorize the Tax Cuts and Jobs Act of 2017. This version contains updates to tax credits which will help make child care more affordable for more working families with young children including:

• Enhancements to the Child and Dependent Care Tax Credit, the only tax credit that specifically helps working parents offset the cost of child care;
• Improvement of the Employer-Provided Child Care Credit (45F), which supports businesses who want to help locate or provide child care for their workforce; 
• Expansion of the Dependent Care Assistance Plan (DCAP), flexible spending accounts that allow working parents to set aside pre-tax dollars to pay for child care expenses. 

The following is a statement from Sarah Rittling, Executive Director of First Five Years Fund:

“Members of Congress have been hearing from working parents around the country that they urgently need support in finding and affording child care. Expanding child care tax credits in the Senate bill is a step in the right direction toward making care more affordable and accessible for families nationwide. We appreciate the Senate’s inclusion of these updates and want to thank Senator Katie Britt (R-AL) for her leadership in making this a priority.

“With two-thirds of children ages five and under living in homes where all available parents are working, child care is not optional for most families – it’s essential. The Senate legislation would update three child care-related tax credits, including the Child and Dependent Care Tax Credit, which goes directly to parents to help cover the cost of child care.

“Under current law, the CDCTC tax break for a family with two young children making $60,000 a year is an average of $1,200. With the Senate enhancements, that tax break would be roughly $2,100, an increase of $900. And as any parent will tell you, when it comes to raising children, every dollar counts. 

“It is important to note that the three child care credits included in the Senate bill are most effective when paired together. Together, they help more families afford child care while allowing them to make the child care choices that best support their individual needs. And at a time when the impact of child care challenges is being felt in boardrooms and breakrooms alike, these credits will engage employers looking to be part of the solution.

As the bill moves forward, we strongly urge the House to prioritize these provisions in a final package.”