Affordable Child Care Act

This bill aims to make child care more affordable by doubling several tax breaks for families and boosting support from employers. It would raise the amount of care costs you can count toward the Child and Dependent Care Credit, increase how much you can put in a dependent care FSA, and raise the cap on an employer tax credit for providing child care. These changes would start with the 2025 tax year (for tax years beginning after December 31, 2024).

Key points

• Families: Doubles the expenses you can claim for the Child and Dependent Care Credit—from $3,000 to $6,000 for one child or dependent, and from $6,000 to $12,000 for two or more, starting in 2025.
• Workers using dependent care FSAs: Doubles the annual limit you can set aside pre-tax for dependent care to $10,000 (half that amount if married filing separately), starting in 2025.
• Employers: Increases the cap on the employer-provided child care tax credit to $300,000, starting in 2025, which could encourage more on-site care or child care help at work.

Overall, the bill would let families keep more of their money when paying for child or dependent care and may push more employers to offer child care support.