Tax break for child care—but only if you earn enough to pay taxes
H.R. 1408 — Affordable Child Care Act · Filed by Sharice Davids (D-KS) · 8 cosponsors · Introduced Feb 18, 2025 · Referred to committee
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What it does
This bill doubles three existing tax benefits for child care: the dependent care tax credit (from $3,000 to $6,000 per child), the employer-provided dependent care assistance program limit (from $5,000 to $10,000 annually), and the employer child care credit cap (from $150,000 to $300,000). The changes apply to tax years beginning after December 31, 2024, and primarily benefit working parents and employers who offer child care benefits.
Why we flagged it
The bill's sole function is to increase the dollar caps and credit amounts on three existing Internal Revenue Code provisions related to child care. It is a straightforward tax-code amendment with no hidden mechanisms or riders.
What the text implies
- The benefit is regressive: a family in the 22% tax bracket saves $660 per child (22% of $3,000 increase), while a family in the 37% bracket saves $1,110 per child. Families below the tax-filing threshold receive no benefit.
- Does not address the core affordability crisis for low-income families, who often cannot afford child care at any price and do not benefit from tax credits.
The full analysis lists 4 implications of this text.
Who stands to gain
working families with above-median incomes; employers offering child care benefits; child care service providers (indirect, via increased demand)