Affordable Child Care Act
- Bill Number
- H.R. 1408
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-02-18: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-06-24T08:05:39Z
AI-Generated Summary
Purpose
The Affordable Child Care Act (H.R. 1408) aims to make child care more affordable for families by doubling the value of specific tax benefits related to children and dependents under the U.S. tax code. It targets credits and assistance programs to reduce the financial burden on parents or caregivers.
Key Provisions
- Child and Dependent Care Credit (Section 2): Increases the maximum expenses eligible for the credit from $3,000 to $6,000 for one qualifying dependent and from $6,000 to $12,000 for two or more. Removes a prior cap on the credit's percentage based on adjusted gross income (AGI, which is a measure of taxable income after certain deductions). Applies to tax years starting after December 31, 2024.
- Dependent Care Assistance Program (Section 3): Doubles the exclusion limit for employer-provided dependent care benefits from $5,000 to $10,000 per year ($2,500 for married individuals filing separately). Eliminates a previous coordination rule with the child care credit. Applies to tax years starting after December 31, 2024.
- Employer-Provided Child Care Credit (Section 4): Doubles the maximum credit available to employers for providing child care facilities or services from $150,000 to $300,000 per year. Applies to tax years starting after December 31, 2024.
Significant Changes to Existing Law
This bill amends the Internal Revenue Code of 1986 by directly increasing dollar limits in three key sections (21, 129, and 45F), effectively doubling the financial benefits without altering eligibility rules. It removes outdated limitations, such as AGI-based reductions and coordination between benefits, simplifying access to these tax incentives.
Potential Impacts
- On Citizens: Families with young children or dependents requiring care (e.g., disabled individuals) could see significant tax savings, potentially up to thousands of dollars annually, easing costs for daycare, after-school programs, or elder care. This may encourage more parents to work or pursue education.
- On Government Agencies: The Internal Revenue Service (IRS) will need to update forms, guidance, and processing systems to handle higher claim amounts, leading to increased administrative workload. The federal government faces higher tax expenditures (foregone revenue estimated in billions over time), potentially affecting budget planning.
- On International Relations: No direct impacts, as the bill focuses solely on domestic tax policy.
Main Stakeholders Affected
- Families and Caregivers: Primary beneficiaries, especially working parents with children under 13 or other dependents needing care.
- Employers: Businesses offering child care benefits gain a larger tax credit incentive to expand programs.
- Taxpayers Overall: Indirectly affected through reduced federal revenue, which could influence funding for other public services.
- Government Entities: IRS for implementation; Congress and Treasury Department for fiscal oversight.
Notable Legal, Constitutional, or Political Implications
- Legal: The changes are routine tax code amendments with no challenges to existing statutes; they maintain the voluntary nature of tax credits and do not impose new mandates.
- Constitutional: No apparent issues, as the bill falls under Congress's clear authority to regulate taxation under Article I of the U.S. Constitution.
- Political: Introduced with bipartisan support (Democrats and Republicans), it highlights a consensus on family support policies but could spark debates on federal spending priorities amid ongoing budget deficits.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (7)
Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Bonamici, Suzanne [D-OR-1], Rep. Mackenzie, Ryan [R-PA-7], Rep. Sorensen, Eric [D-IL-17], Rep. Carbajal, Salud O. [D-CA-24], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Ansari, Yassamin [D-AZ-3]
Recent Actions
- 2025-02-18: Referred to the House Committee on Ways and Means.
- 2025-02-18: Introduced in House
- 2025-02-18: Introduced in House
Bill Versions
- Affordable Child Care Act — issued 2025-02-18 — PDF (3 pages)