First Five Years Fund, 85 Organizations, Small Businesses, Chambers of Commerce Call On Congress To Act

The First Five Years Fund (FFYF) along with a coalition of national organizations, corporations, small businesses, and Chambers of Commerce, are calling on Members of Congress to help make child care more affordable by updating the U.S. tax code. 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. Signers of the letter sent to Members included Bipartisan Policy Center, Independent Restaurant Coalition, Goldman Sachs 10,000 Small Businesses Voices, and U.S. Chamber of Commerce (full list below).

As we enter the last weeks of the fiscal year, Congress has the opportunity to address America’s child care crisis, including through the tax code. Here are the First Five Things To Know about strengthening and modernizing the parts of the U.S. tax code which allow families and businesses to offset child care costs. 

1. Child care is a major expense for working families with small children. Today, the high cost and limited supply of quality, reliable child care means it can be very hard to find. Wait lists are long and care can be so expensive that many working parents simply cannot afford it. (Since 1990, child care costs have risen 214%, with the price of care rising 25% in the last decade alone — twice as fast as other major expenses like housing and groceries.) 

2. The federal tax code has provisions designed to help offset the high cost of child care. These include:  

  • 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. 

3. Unfortunately, these provisions are limited in their reach, which reduces their ability to help working parents access quality child care. Updating the federal tax code would simultaneously help more parents afford child care while supporting employer efforts to connect employees to child care options. Together with strong federal funding for programs, this would strengthen America’s child care system, benefitting working families, young children, and local economies. 

4. This is popular with Republican, Democratic, and Independent voters. A 2023 poll from First Five Years Fund found that 78% of voters (including 73% of Republicans and 86% of Democrats) support increasing the tax credit specifically designed to help working parents offset the cost of child care. And 82% of voters (including 78% of Republicans and 86% of Democrats) support providing tax incentives to businesses which provide or help their employees find and afford quality early childhood education programs. 

5. Congress can expand and update these tax provisions to help working families and bolster local economies. Child care experts, providers, and employers are calling on the Senate Finance and the House Ways and Means Committees to take action to make child care more affordable by bolstering supports for working parents and employers who understand that access to child care is an essential part of a stable, productive workforce. 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. 

Updating the federal tax code to strengthen child care has bipartisan and multifaceted support.  

  • Not only did 85 child care experts, providers, and employers sign the letter to Congress calling for updates to the federal tax code to help strengthen child care.  
  • A bipartisan group of Members is already taking action to improve these tax credits with H.R. 4571, the Child Care Investment Act of 2023, which was introduced by Rep. Salud Carbajal (D-CA) and Rep. Lori Chavez-DeRemer (R-OR). This bill would enhance the three existing tax credits to address the cost and accessibility of child care for working parents.  

From the letter to Members of Congress:  

“We are writing to express our strong support for the Child and Dependent Care Tax Credit (CDCTC), the Dependent Care Assistance Program (DCAP), and the Employer Provided Child Care Tax Credit (45F). Lack of access to child care across the country affects businesses, parents, and our youngest children. Solutions must address the needs of all three. When combined with existing sources of federal child care funding, these tax provisions have the potential to do just that: the CDCTC and DCAP help parents afford child care and 45F helps businesses provide it. All of this helps ensure that children receive the quality care that they deserve. We urge you to expand and better align these tax provisions for working families and businesses to improve access to quality, affordable child care.”

Full list of signers: Academy Closet, Agape Global Ministries, Alaska Chamber, Arizona Chamber of Commerce & Industry, Association of Maternal & Child Health Programs, Ben, Mynatt Family of Dealerships, Big Blue Marble Academy, Bipartisan Policy Center, Busy Bees North America, Cabarrus Brewing Company, Cabarrus Economic Development, Central Montana Works!, Chamber Board Member, Charlotte Motor Speedway, Child Care Aware of America, Child Development Schools, Inc., Christian County Chamber of Commerce, Colorado Executives Partnering to Invest in Children (EPIC), Council for a Strong America, Early Care and Education Consortium, Early Matters San Antonio, Educare Learning Network, Engage: Promoting Women’s Economic Security, eXp Commercial, First Five Years Fund, First Focus on Children, GATE Pregnancy Resource Centers, Goldman Sachs 10,000, Small Businesses Voices, Greater Kansas City Chamber of Commerce, Greater San Antonio Chamber of Commerce, Greater Shreveport Chamber, Harrisburg Security Inc., Help Me Grow National Center, Hilbish Ford, Horizon Education Centers, Huntsville/Madison County Chamber, Idaho Association of Commerce and Industry, Independent Restaurant Coalition, Indiana Chamber of Commerce, Indy Chamber, Johnny Roger’s BBQ & Burgers, Kaplan Early Learning Company, Kentucky Chamber of Commerce, Kiddie Academy, KinderCare Learning Companies, Lightbridge Academy, Metro Atlanta Chamber, Michigan Chamber of Commerce, Minnesota Child Care Association, Missouri Chamber of Commerce and Industry, Montana Chamber of Commerce, Mortice Commercial Real Estate, National Association of Counties, National Head Start Association, NC Chamber, New Horizon Academy, New Horizon Academy, Ohio Association of Child Care Providers, PHX East Valley Partnership, Primrose Schools, ReadyNation, RIZON Air Technologies, Rowan-Cabarrus Community College, Safari Kid Global, Inc., Save the Children, SHRM, Small Business For America’s Future, Southwest Michigan Regional Chamber, Start Early, Sublmnl Design, LLC, Synergy Realty Group, Teaching Strategies, Teachstone Inc., Texas Association of Business, The Chamber, Leading Business in Cabarrus, The Gardner School, The Malvern School, The Nest Schools, The Salt Lake Chamber, The Sunshine House Inc., TOOTRiS Child Care On-Demand, Town of Harrisburg, U.S. Chamber of Commerce, Zutado Soul