News Releases

Senators Introduce Legislation to Expand Tax Credit, Help Families Afford Child Care

Jul 08 2014

Helping Working Families Afford Child Care Act would respond to rising child care costs for American parents

(Washington, DC) – U.S. Senators Patty Murray (D-WA), Jeanne Shaheen (D-NH), Barbara Boxer (D-CA), and Kirsten Gillibrand (D-NY) introduced legislation today to support working families across the country by enhancing the Child and Dependent Care Tax Credit (CDCTC) to help make child care more affordable.  The Helping Working Families Afford Child Care Act addresses the challenge millions of families face in paying for child care by increasing the amount of eligible child care expenses used to calculate the CDCTC, and by expanding the credit to countless low-income families who currently are not eligible.

The bill would adjust the CDCTC, enacted in 1976 to defray the cost of child care for working families, to more accurately account for current child care costs.  The size of the current credit is outdated and does not reflect the rising costs of care faced by today’s working parents, which in some parts of the country can exceed $10,000 annually. 

“Updating the Child and Dependent Care Tax Credit to reflect the needs of families in today’s economy would be a critical step forward on our larger effort to make sure working parents can succeed on the job and at home, and would help break down one of the biggest barriers many mothers face to re-entering the workforce,” Senator Murray said. “I want to thank Senator Shaheen for her leadership in introducing this important legislation and I hope our colleagues on both sides of the aisle will join us in ensuring that working families get the relief they deserve.”

Under the bill, low- and middle-income families would be eligible for a tax credit equal to 20 percent of child care expenses up to $8,000 for one child and $16,000 for two or more children, an increase from the current eligible costs of $3,000 and $6,000, respectively. The legislation would also index the new expense limits for inflation to ensure the reformed credit does not lose value over time. These thresholds have not been increased since 2001.

With the Helping Working Families Afford Child Care Act, families would become eligible for maximum credits of $1,600 of $3,200 in 2015. Additionally, the bill would fix a problem under current law by making the credit fully refundable, enabling more low-income working parents to better afford the child care they need to boost their workforce participation and support their families.

Full text of the bill