New Report Highlights Impact of Child Care Tax Credits
Key Takeaway
Existing child care tax incentives are a tool that can reduce child care costs for families while delivering a strong return on investment for employers.
Overview
A new report from the Joint Economic Committee (JEC) Minority “lays out ways that businesses and their employees can save money through increased use of already existing child care tax cuts” to help more businesses and families save money on their taxes and get more children the high-quality, reliable care that they need. The report outlines three key child care tax credits – the Child and Dependent Care Tax Credit (CDCTC), Dependent Care Assistance Programs (DCAP), and the Employer-Provided Child Care Credit (45F) – that help businesses and working families reduce the cost of child care.
Key Findings
- Child care tax benefits can be a win for businesses and families alike. In one scenario, a company spending $2.8 million over five years to provide child care to employees could leverage 45F to save $820,000 in the amount of taxes owed over that same time. Additionally, this investment would yield an additional $8.1 million in benefits through stronger employee retention and increased productivity.
- Working parents could see meaningful savings. Over that same time, employees at that company could save nearly $10,000 in child care costs using DCAP and the CDCTC.
- An impressive ROI. Every dollar businesses invest in employer-supported child care returns an average of $2.90 through lower turnover, improved productivity, and a more stable workforce.
- Existing child care tax benefits represent a significant opportunity for more businesses and families to save. Expanding awareness and utilization of these tools could help more employers support working parents and allow more families to benefit from savings already available under current law.
FFYF’s Take
“”These findings reinforce that when employers invest in child care, they can strengthen their workforce, improve retention, and help parents better afford the care they need to work and support their families,” said Sarah Rittling, Executive Director of First Five Years Fund. “We’re grateful to Senator Hassan and the Joint Economic Committee for highlighting the real savings that existing child care tax incentives can deliver for both businesses and working families.”
Learn More
The tools to help businesses and families with child care already exist. The challenge is ensuring employers know about them and can easily use them. Greater awareness and technical assistance could help more businesses invest in child care, strengthen their workforce, and lower costs for working families.
FFYF’s recent report on the Employer-Provided Child Care Tax Credit (45F) highlights how businesses across the country are already using the credit to support working parents, strengthen their workforce, and invest in their communities.
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