Parents Would Get Up to $8,000 Under New Democratic Bill

In a move to support American families grappling with the surging costs of child care, Democratic Senators Bob Casey, Patty Murray and Ron Wyden have introduced the Child and Dependent Care Tax Credit Enhancement Act of 2024.

The legislation aims to permanently augment child care tax credits, elevating the maximum credit to $4,000 per child and ensuring it adjusts with inflation, thereby broadening eligibility to encompass low-income families.

In parallel, Democratic Senators Jeanne Shaheen, along with Angus King, introduced the Right Start Child Care and Education Act, targeting the affordability and accessibility of child care by reforming the federal tax code and incentivizing the child care workforce.

What You Need to Know

These legislative efforts mark a stride towards alleviating the financial strain on families by enhancing tax relief and expanding access to quality child care.

With the backdrop of a pandemic that has magnified child care costs, the two bills propose immediate relief through tax credits as well as addressing long-term challenges by supporting the child care sector and its workforce.

Read more: The Child Tax Credit: Who Qualifies and How to Claim It

The Child and Dependent Care Tax Credit Enhancement Act of 2024 increases the financial assistance provided to families for child care expenses. Under the bill, the maximum credit a family can receive would double to $4,000 for one child and up to $8,000 for two or more children.

The enhancement is designed to keep pace with the rising cost of living, as the credit will be indexed to inflation, ensuring its value does not diminish over time.

Importantly, the bill aims to make the credits more accessible to low-income families by making the credit refundable. This means that families who owe less in taxes than the value of the credit can still receive the full benefit, a change from the current system where many low-income families cannot take full advantage of the credit due to their lower tax liabilities.

"Not only is this tax credit an important financial boost for parents, it's also a matter of economic fairness for workers," Casey, of Pennsylvania, said in a statement. "The sky-high cost of child care puts way too many American families in a position where Mom or Dad is forced to leave their job to take care of the kids. That should be a choice people make because they want to, not because they need to for financial reasons."

Casey noted that the temporary expansion of the Child and Dependent Care Tax Credit in the American Rescue Plan had quadrupled the average family's credit from $593 to $2,158. Making the expansion permanent, as proposed in the bill, would ensure ongoing relief for families struggling with child care costs.

Newsweek reached out to Casey by email for comment on Monday.

In tandem, the Right Start Child Care and Education Act introduced by Shaheen, of New Hampshire, and King, of Maine, focuses on making child care more affordable and accessible through a series of tax code reforms.

The bill includes expanding the employer-provided child care credit, enhancing dependent care flexible spending accounts, and creating a new tax credit for child care professionals with college degrees. The aim is to strengthen the child care workforce and provide incentives for businesses to support their employees' child care needs.

Both pieces of legislation reflect a concerted effort by lawmakers to address the financial challenges that many American families face in affording quality child care. Both bills are at the early "introduced" stage of the process, and must be passed by the Senate, then by the House, then signed by the president to become law.

As the bills move through the legislative process, they offer the potential to ease the burden of child care costs, providing relief and support to families across the nation.