Sponsors
The bill expands parental choice and direct support for family/relative caregivers and increases federal support for certificate‑based child care, but does so by shifting funding away from some state programs, weakening oversight, and eliminating existing tax benefits that many working parents currently use.
Parents (including low-income families) can use child care certificates to pay a wider set of providers (including relatives and in‑home caregivers), increasing flexibility and access to care.
Federal matching rules shift so states must fund a larger share (90% vs. 70%) of direct services through certificates, likely increasing direct family assistance rather than state-administered services.
Relative caregivers are explicitly authorized and must be notified as potential payment recipients, with a minimum payment parity requirement (at least 75% of family child care rates), improving compensation and usable care options for family providers.
Many working parents lose the dependent care tax credit (section 21), removing a refundable/nonrefundable tax benefit that offset child and dependent care costs for large numbers of families.
Shifting a larger share of funding into certificates may reduce state‑run programs and investments in quality, training, or system capacity that previously came from direct services funding.
Exempting certain in‑home and relative caregivers from program requirements may weaken oversight of safety and quality for children cared for in home settings.
Based on analysis of 3 sections of legislative text.
Requires states to offer child care certificates, adjusts TANF protections for working/newly married parents, exempts certain in‑home/relative providers, and repeals the dependent care tax credit.
Introduced February 12, 2025 by James E. Banks · Last progress February 12, 2025
Requires states to give parents the option to receive a child care certificate for eligible children, directs that direct child-care services be delivered via those certificates, and exempts certain in‑home and relative caregivers from some program requirements. Changes how states set termination rules for assistance to protect working and newly married parents by tying thresholds to State median income for a family with the same number of parents and children and by requiring at least a six‑month continuation of aid after marriage in some cases. Repeals the federal income tax credit for household and dependent care services and moves related rules into other parts of the tax code, revises definitions of employment‑related child care expenses and deemed earned income for certain spouses, and makes conforming changes; the tax changes apply to taxable years beginning after enactment.