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Introduced February 12, 2025 by James E. Banks · Last progress February 12, 2025
Requires states to deliver federal child care assistance through a certificate system that protects parental choice, expands and clarifies rules for relative and religious caregivers, sets minimum relative payment rates, and creates two $50 million pilot programs—one to prevent fraud and one to boost relative caregiving. Also repeals the federal dependent care tax credit and makes multiple tax-code edits so related rules and definitions still apply. Parents, relatives who provide care, religious child care providers, states that administer child care grants, and taxpayers who used the dependent care tax credit would see the biggest changes; federal agencies must issue reports and set up two short pilot programs within one year and run them for two years.
The bill expands subsidized access to relative and flexible child care and clarifies certain tax/eligibility rules while shifting funds toward certificates and pilots and eliminating the §21 dependent-care tax credit—trading broader provider choice and implementation funding for higher out‑of‑pocket costs for some families, potential oversight gaps for religious providers, and added eligibility and compliance complexity.
Parents and families gain an explicit option to receive child-care certificates they can use to pay relative caregivers or other eligible providers, increasing access to subsidized care choices.
Relative caregivers receive a minimum payment protection (at least 75% of family child care rates), improving compensation predictability for family members who provide care.
States and local programs get federal pilot grant funding ($50M for fraud prevention and $50M for expanding relative‑caregiver networks) to test approaches and support implementation.
Parents and caregivers lose the dependent care tax credit under §21, which will raise after‑tax childcare costs for many families—especially low- and moderate-income households.
Parents and children may see reduced investment in quality improvement activities because the bill caps quality set‑asides at 9% (+3% for infants/toddlers), shifting more federal funds into certificates and pilots.
Children, state regulators, taxpayers, and religious organizations face increased church‑state and safety risks because expanded protections for religious providers can limit uniform licensing/health‑safety oversight and allow public funds to support explicitly religious programming.