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Introduced March 24, 2025 by Riley M. Moore · Last progress March 24, 2025
Replaces a large portion of current child care grant rules so most federal child care assistance must be provided through child care certificates that parents hold and use to pay providers; raises protections and payment rules for relative and in‑home caregivers; adds legal protections for religious child care providers; and creates two two‑year pilot programs (each authorized at $50 million) to prevent fraud and increase relative caregiving. The bill also repeals the federal household and dependent care tax credit and makes related tax‑code changes for taxable years beginning after enactment.
The bill increases parental choice and supports family‑based child care providers through certificates, payment floors, and targeted grants, but it shifts funding toward certificate-based delivery and tax rule changes that raise costs or reduce flexibility for many families and for state programs.
Parents and families who qualify will receive child care certificates they can use directly to pay the provider of their choice, increasing parental choice and flexibility in obtaining care.
Relative caregivers and in‑home providers get clearer statutory protections, minimum payment-rate floors (at least 75% of family child care rates), and reduced regulatory burdens, which can improve pay and increase access to affordable family-based care.
The bill earmarks additional quality-improvement funds (including an extra 3% for infant/toddler care), directing more resources toward early childhood development and infant/toddler supports.
Parents and families who previously relied on the dependent care tax credit will lose that credit for taxable years after enactment and—because FSAs and employer coverage do not fully replace the credit for many households—low- and moderate-income families may face higher net tax liability and out‑of‑pocket child care costs.
Requiring most direct services to be delivered via certificates and earmarking portions of funding (including the infant/toddler set‑aside) shifts money away from state-run direct services and flexible block‑grant style uses, reducing states' ability to fund workforce supports, quality initiatives, or other locally prioritized programs.
Allowing certificates to be used to pay religious providers and permitting providers to spend program funds on religious activities raises church‑state separation concerns and could limit availability of secular alternatives for some families.