HR 1408119th CongressIn Committee

Affordable Child Care Act

Introduced: Feb 18, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Affordable Child Care Act (H.R. 1408) would significantly increase the value of several federal tax benefits related to child and dependent care. Specifically, it doubles the maximum eligible expenses for the Child and Dependent Care Credit, doubles the allowable amount of employer-provided dependent care benefits that can be excluded from wages, and doubles the cap for the employer-provided childcare credit. The bill also makes a conforming clerical amendment and would take effect for tax years beginning after December 31, 2024 (i.e., starting in 2025). In short, the bill aims to make child care more affordable by expanding the size of these tax incentives and the amount of care that can be covered or subsidized. What this means in practice: working families could receive larger tax relief for child and dependent care costs, and employers that offer dependent care benefits or childcare facilities could see larger tax incentives. The overall fiscal impact would depend on how taxpayers respond to the larger benefits and on any accompanying changes in labor force participation or child care usage.

Key Points

1Child and Dependent Care Credit doubled
2- Section 21(c): the maximum eligible care expenses for one qualifying individual increase from $3,000 to $6,000; for two or more qualifying individuals from $6,000 to $12,000.
3- The overall credit percentage structure (though not changed by the bill text provided) would apply to these higher expense amounts.
4Dependent Care Assistance Program (DCAP) limit doubled
5- Section 129(a)(2): the employer-provided dependent care benefits exclusion from income increases from $5,000 to $10,000 (with the married filing separately amount rising to $5,000, i.e., half of the $10,000).
6- Subparagraph (D) is removed, reflecting a simplification in how the limit is applied.
7Employer-provided childcare credit doubled
8- Section 45F(b): the maximum qualified childcare expenditures eligible for the credit rise from $150,000 to $300,000.
9Conforming amendment
10- Section 2(b): Adjusts the internal structure of Section 21 by removing subsection (g) and redesignating subsection (h) as (g), aligning with the changes to the credit.
11Effective date
12- Applies to taxable years beginning after December 31, 2024 (i.e., starting in 2025).

Impact Areas

Primary group/area affected- Working families with children or dependents who incur care costs will see larger potential tax relief and coverage for care expenses.Secondary group/area affected- Employers who provide dependent care benefits or operate or sponsor childcare facilities (increasing the value of exclusions and credits they can claim).Additional impacts- Government revenue: potential reduction in tax revenue due to larger credits/exclusions.- Labor market effects: could influence labor force participation, particularly among caregivers who may be more able to work if child care costs are more affordable.- Child care market: may affect demand for child care services and capacity planning as more families can afford care.

Generated by gpt-5-nano on Nov 18, 2025