Category: Americas

Washington, D.C.- April 24, 2025, Representatives Danny K. Davis (D-IL), Suzan DelBene (D-WA), and Linda Sánchez (D-CA) introduced the Child and Dependent Care Tax Credit Enhancement Act to permanently expand the child care tax credit to raise the maximum credit from $1,050 to $4,000 for 1 child and from $2,100 to $8,000 for 2 or more children.  This bill is led by Senators Tina Smith (D-MN), Ron Wyden (D-OR), and Patty Murray (D-WA) in the Senate.

The Child and Dependent Care Tax Credit (CDCTC) is the only tax credit that helps working parents offset the rising cost of child care.  In 2021, Democrats successfully enhanced both the CDCTC and the Child Tax Credit because both credits are essential to support parents’ ability to provide for their families.  While 100% of the CDCTC reimburses parents for actual child care costs paid to work, parents mostly use the Child Tax Credit to defray other significant costs of caring for a child, such as food, rent, and clothing. 

Unfortunately, as currently structured, the CDCTC fails to meet the needs of tens of millions of working families. Very few families receive meaningful benefit from the credit due to the extremely low phase-out level of $15,000, the low expense limits, the non-refundable nature, and the loss of benefit due to inflation.  For example, the Tax Policy Center estimates that only 13% of families with children claimed the CDCTC in 2022.  The Child Care and Dependent Credit Enhancement Act will increase the maximum credit amount to $4,000 per child up to $8,000 for two or more children, expand eligibility to low-income families, make the credit available to married couples who file separately due to high student loan debt, and retain the credit’s value over time by indexing it to inflation.  Compared to 2019, low-income working parents quadrupled their credit received in 2021. 

High-quality, affordable child care is essential to the economic well-being of families, businesses, and our country. Yet, child care places a major financial burden on American families. The price of child care can range from $5,357 to $17,171 per year depending on location and type of care.  Astoundingly, the cost of center-based care for two children is more than the average mortgage in 41 states and more than the average annual rent in all 50 states plus DC.  Households under the poverty line spend nearly one third of their income on child care, and increases in median child care prices are connected to lower maternal employment rates. Further, the child care crisis hits families of color disproportionately hard. For a single parent who has never been married who is Black, Hawaiian/Pacific Islander, or American Indian/Alaska Native, child care can cost 36%, 41%, or 49% of the median income, respectively, compared to only 31% for single White parents.  Further, Latino and American Indian and Alaska Native parents disproportionately live in child care deserts.

“High-quality, affordable child care is essential to the economic well-being of families, businesses, and our country,” said Rep. Davis.  “I am proud to lead the Child and Dependent Care Tax Credit Enhancement Act that would restore the 2021 credit so that families can receive up to $4,000 for child care for one child or up to $8,000 for two or more children, much better than the almost $600 that the typical family receives currently.  This bill would strengthen the financial well-being of families and grow our economy.  It is critical that Congress acts now to help working families.”

“Access to affordable child care is one of the biggest barriers families face. Enhancing the Child and Dependent Care Tax Credit will give parents the relief they need by supporting both families and care providers,” said DelBene. “This bill is a commonsense step toward making child care more accessible and affordable for every family.” 

“Working parents shouldn’t have to choose between earning a paycheck and caring for their kids,” said Sánchez. “Expanding the child care tax credit will make child care more affordable and accessible, so parents can focus on their work knowing their kids are being cared for.”

The bill is endorsed by state and national child and worker advocates, including:  Center for Law and Social Policy; Child Care Aware of America; Early Care and Education Consortium; First Five Years Fund; First Focus Campaign for Children; MomsRising; National Association for the Education of Young Children; National Women’s Law Center Action Fund; Save the Children; Start Early; Society for Human Resource Management (SHRM); and ZERO TO THREE.

Example Statements from Supporting Organizations

“Often conflated with the child tax credit, the Child and Dependent Care Tax Credit is one of the only tax incentives that helps working families with their child care expenses.  As the cost of care increases, many families must contend with whether their current job pays enough to justify their child care expenses,” said Radha Mohan, Executive Director, Early Care & Education Consortium.  “For families where one parent must leave the workforce because they cannot afford the cost of care, this often hurts the family from an economic standpoint in the long run.  The CDCTC Enhancement Act helps ensure that families do not have to make this choice by providing a credit to offset the cost of care.  When paired with programs such as the Child Care and Development Block Grant, this bill will ensure that many families will have reduced their child care costs by over 50%.”

“As almost any working family with young children will tell you, the cost of child care is a major source of financial stress, putting immense pressure on already tight budgets,” First Five Years Fund Executive Director Sarah Rittling. “The Child and Dependent Care Tax Credit Enhancement Act would make essential updates to the CDCTC to ensure more parents are able to keep more of what they earn to offset the high cost of care. We are grateful to Reps. Danny Davis, Suzan DelBene, and Linda Sanchez for their leadership and commitment to supporting families with young children.” 

“For families with young children, the cost of childcare is often unaffordable and impacts their economic opportunity—the cornerstone of child and family well-being. The Child and Dependent Care Tax Credit (CDCTC) Enhancement Act of 2025 is an important effort to update the CDCTC to ensure that more families can offset their child care costs. We are grateful to Rep. Danny Davis and his longstanding efforts to support children and families in his district and across the country, and also extend that appreciation to Reps. Suzan DelBene and Linda Sanchez.” Diana Rauner, President, Start Early

“Affordable child care isn’t a luxury—it’s the backbone of our economy,” said Yelena Tsilker, Senior Government Relations and Advocacy Director at ZERO TO THREE, a national nonprofit that focuses on the healthy development of babies and toddlers. “Parents of infants now face child care bills that top $16,000 a year—higher than in-state college tuition in many states. The Child and Dependent Care Tax Credit Enhancement Act tackles that crisis head-on by making the CDCTC fully refundable and increasing the maximum credit, so families of every income can choose the high-quality care their babies need. This relief will keep parents in the workforce and help millions of children thrive. We applaud Representatives Davis, DelBene, and Sánchez for championing legislation that hard-working families have long awaited.” 

The text of the bill is available HERE; a summary of the bill is available HERE.

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