Sponsors (2)
The bill expands access to and tax support for youth physical activity through a new grant program and tax changes that help many families, but it creates administrative complexity and leaves gaps—caps, exclusions, and coordination rules mean some families and providers see reduced or limited benefits.
Families—especially low- and moderate-income households—gain expanded access to affordable youth sports through a new $200 million grant program that helps cover participation fees and supports two-year community programs.
Parents can claim youth physical activity expenses toward the child and dependent care credit (up to $4,000 for one child or $7,000 for two+ children), lowering out-of-pocket costs for many families paying for organized activities.
Taxpayers get clearer, predictable dependent-care FSA contribution rules with a federal cap of $10,000 per dependent per year, simplifying planning for many families and employers.
Many taxpayers and the IRS will face added complexity and compliance burden from new definitions, coordination rules, and exceptions (new camp rule exception, coordination with section 129, and deduction criteria), increasing filing complexity and administrative costs.
Families that use employer-dependent-care FSAs or have multiple dependents may see smaller tax benefits—new coordination and a $10,000-per-dependent cap can reduce previously available pre-tax or credit value, raising taxable income for some households.
The monetary caps ($4,000/$7,000 credit inclusion and $1,000/$2,000 deduction) and equipment/item limits will leave many families—especially those facing high-cost programs or multiple activities—still paying substantial out-of-pocket expenses.
Based on analysis of 5 sections of legislative text.
Makes youth physical activity costs eligible for certain tax benefits, caps DCFSA contributions, and funds HHS grants to expand recreational youth sports access.
Introduced January 8, 2026 by Josh S. Gottheimer · Last progress January 8, 2026
Creates new tax benefits and a grant program to lower family costs for youth sports and fitness. It makes payments for organized youth physical activities eligible for the child and dependent care tax credit, allows some youth-activity costs to be treated as medical-expense deductions (subject to caps and limits), sets new limits on dependent-care flexible spending account (DCFSA) salary reductions, and directs HHS to run a competitive grant program to expand access to recreational youth sports with $200 million authorized for FY2026–2030. Most tax changes take effect for tax years beginning after December 31, 2025; the grant program must be established within one year of enactment.