Sponsor
James E. Banks
Senator · R-IN
Senator · R-IN
The bill expands and funds kinship-based childcare and clarifies some tax rules, giving families more choice, but shifts support toward parent‑directed vouchers, reduces oversight for in‑home relative care, and eliminates an existing dependent care tax credit—raising costs and administrative burdens for many families and states.
Parents and children: expands and finances kinship (relative) child care by allowing parents to use certificates to pay relatives, guaranteeing at least 75% of family child care rates to relative caregivers, requiring periodic state review of rules that block relative caregivers, and authorizing $50M in pilots to improve verification and promote relative‑care programs.
Families with nonworking spouses or students: preserves certain dependent‑care rules (special spouse earned‑income rules) in section 129 so employer FSAs continue to work for households with a nonworking spouse or student.
Taxpayers and administrators: clarifies and consolidates tax definitions and cross‑references, reducing legal ambiguity for taxpayers and IRS/state tax administrators.
Many families and child care providers: eliminates much program‑contracted capacity by shifting roughly 90% of direct services to a voucher/certificate model, which could reduce stable provider slots and destabilize existing providers.
Children and parents: exempts in‑home and relative caregivers from certain program requirements, potentially reducing oversight and raising child safety and quality concerns in those caregiving settings.
Families that used the dependent care tax credit: eliminates section 21 tax credits, meaning many families will lose that credit and face higher after‑tax child care costs compared with the prior tax credit structure.
Based on analysis of 3 sections of legislative text.
Requires CCDBG services be delivered by child care certificates, narrows provider requirements, and repeals the child and dependent care tax credit.
Official title: Reauthorize the Child Care and Development Block Grant Act of 1990, to improve access to relative caregivers, and for other purposes.
Introduced February 12, 2025 by James E. Banks · Last progress February 12, 2025
Changes federal child care rules to require that services under the Child Care and Development Block Grant (CCDBG) be delivered through child care certificates and narrows several provider-related requirements and protections for parents; it also repeals the federal child and dependent care tax credit and updates related tax-code references, with the tax changes effective for taxable years beginning after enactment.