To amend the Internal Revenue Code of 1986 to provide a credit for increasing wages paid to child care providers.
- Bill Number
- H.R. 8023
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-19: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-09T08:05:55Z
AI-Generated Summary
Purpose
This legislation, H.R. 8023, aims to encourage employers in the child care sector to raise wages for workers by offering a tax credit. The goal is to improve the supply of child care services, making it easier to attract and retain qualified staff, which supports working families and the broader economy.
Key Provisions
- Tax Credit Calculation: Employers can claim a credit equal to the lesser of:
- 5% of qualified child care wages paid in the taxable year (increased to 7% for facilities in rural areas, defined as non-urban areas under federal highway law), or
- The increase in qualified wages compared to the previous year.
- Eligibility Requirement: The credit is only available if the employer's average hourly wage for child care workers rises from the prior year. Average hourly wage is calculated by dividing total qualified wages by total hours worked.
- Definitions:
- Qualified child care wages: Wages paid to eligible child care workers, based on standard federal definitions (excluding any amounts used for other tax credits).
- Qualified child care worker: An employee at an eligible facility who provides direct child care services, such as care, education, supervision, or guidance to children.
- Eligible child care facility: A facility serving at least 6 children, charging fees or receiving payments/grants, and complying with state or local laws.
- Other Features:
- Employers can elect not to claim the credit for a given year.
- The credit is part of the general business credit (under IRC Section 38) and qualifies for elective payment (direct refund) under IRC Section 6417.
- No double-dipping: Wages used for this credit cannot reduce taxable income under other rules (IRC Section 280C).
- Effective Date: Applies to taxable years beginning after the bill's enactment.
Significant Changes to Existing Law
- Adds a new Section 45BB to the Internal Revenue Code (IRC) for the "Child Care Supply Credit."
- Updates IRC Section 38 to include this as a general business credit.
- Expands IRC Section 6417 to allow elective payments for this credit.
- Amends IRC Section 280C to prevent overlap with other wage-related deductions.
- These changes introduce a targeted incentive not previously available, focusing specifically on wage increases in child care.
Potential Impacts
- On Government Agencies: The Internal Revenue Service (IRS) will need to administer the new credit, including verifying wage increases and facility eligibility, potentially increasing administrative workload but offset by elective payment options that treat credits like refunds.
- On Citizens: Child care workers may see higher wages, improving their financial stability. Families could benefit from a more reliable child care supply, enabling more parents (especially women) to participate in the workforce. Employers in child care may face higher costs but gain tax relief.
- On International Relations: No direct impact, as this is a domestic tax policy focused on U.S. employers and workers.
Main Stakeholders Affected
- Child Care Employers/Facilities: Primary beneficiaries through tax credits, but must increase wages to qualify.
- Child Care Workers: Gain from potential wage hikes, addressing low pay in the sector.
- Families and Children: Indirectly benefit from improved child care availability and quality.
- Taxpayers and Government: Broader taxpayers fund the credits via reduced revenue; state/local governments may see alignment with their regulations.
Notable Legal, Constitutional, or Political Implications
- Legal: Introduces a new business incentive under the IRC, with clear definitions to minimize disputes over eligibility. The elective payment option (like a refundable credit) could face IRS implementation challenges but aligns with existing tax rules.
- Constitutional: No apparent issues; it uses Congress's taxing and spending powers (Article I, Section 8) to promote economic welfare without infringing on states' rights, as it defers to state/local compliance for facilities.
- Political: Bipartisan introduction (by Rep. Sanchez and Rep. Miller) signals broad support for child care as a workforce issue. It could influence future debates on tax incentives for social services, potentially reducing child care shortages in rural vs. urban areas.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Sánchez, Linda T. [D-CA-38]
Cosponsors (2)
Rep. Miller, Carol D. [R-WV-1], Rep. Salinas, Andrea [D-OR-6]
Recent Actions
- 2026-03-19: Referred to the House Committee on Ways and Means.
- 2026-03-19: Introduced in House
- 2026-03-19: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to provide a credit for increasing wages paid to child care providers. — issued 2026-03-19 — PDF (6 pages)