Expanding Child Care Access Act of 2025
The Expanding Child Care Access Act of 2025 would create a new tax credit, called the Licensed Family Child Care Credit, under the Internal Revenue Code. The credit would allow a qualified taxpayer to claim up to $5,000 of qualified child care startup expenses in a taxable year or the preceding year, offset against their tax liability. To be eligible, a taxpayer must operate a qualified family child care provider that is licensed or registered under state law, is primarily located in the taxpayer’s home, and serves at least two children (other than the taxpayer’s own) for a significant portion of the year. The bill also defines which startup expenses qualify (licensing fees, supplies, insurance, fencing, playground equipment, furniture, salaries for employees other than the taxpayer, computers/printers, training, and renovations to meet licensure). Key features include strict limits to prevent double benefits (no credit if already claimed a credit in another year or for an expense that is deductible or creditable under another provision), potential regulatory guidance to coordinate with state/local licensing entities, and a sunset provision that the credit expires seven years after enactment. The effective date applies to amounts paid or incurred after enactment.
Key Points
- 1New credit: Licensed Family Child Care Credit (Sec. 36C), a credit against tax for qualified startup expenses of a family child care provider.
- 2Credit amount and timing: Up to $5,000 of qualified child care startup expenses in the current taxable year or the preceding year.
- 3Qualified taxpayer: An individual who operates a qualified family child care provider.
- 4Qualified family child care provider criteria:
- 5- Licensed or registered under state law and compliant with state/local requirements,
- 6- Primarily provides child care at the taxpayer’s primary residence,
- 7- Serves at least two children (not including the taxpayer’s own) for a significant portion of the year.
- 8Qualified startup expenses: Includes licensing fees, child care supplies, liability insurance, fencing and installation, outdoor playground equipment, furniture, salaries for employees other than the taxpayer, printers/computers, required professional training, and renovations/remediation to meet licensure.
- 9Limitations: No credit for expenses already claimed in another year; no double benefit with other deductions or credits.
- 10Regulations: Secretary to issue guidance and regulations, including information reporting and coordination with licensing entities.
- 11Sunset: Credit expires for any tax year beginning more than seven years after enactment.
- 12Effective date: Applies to amounts paid or incurred after enactment.
- 13Administrative changes: Minor conforming and clerical amendments to cross-references and the bill’s place in the code.