New Bill Proposes Boosting Employer Child Care Tax Credits Up To 60%, Aims to Expand Workplace Options

The "Child Care for American Families Act" is on the table, and its main goal is to make it much more financially attractive for employers to help their workers with child care. It plans to do this by significantly increasing the existing tax credit, found in Section 45F of the Internal Revenue Code, for businesses that provide or help pay for child care services. Essentially, the bill wants to give companies a bigger incentive to offer these crucial benefits, which could be a game-changer for working parents.

Bigger Breaks for Offering Child Care

So, what are the numbers? Under Section 2 of the Act, the bill proposes a substantial hike to the employer-provided child care credit. Generally, the credit would jump to 40% of qualified child care expenditures. But it gets even better for certain businesses. "Eligible small businesses" – those with 500 or fewer employees – could see a 50% credit. And for companies setting up "qualified child care facilities" in economically stressed areas (think census tracts described in section 45D(e), which are typically low-income communities) or in "rural counties" (where over half the folks live in rural census blocks), the credit could hit 60%. For instance, a small tech company in a rural town that decides to build an on-site daycare could get a significant portion of that investment back as a tax credit. There's a cap, though: the maximum credit an employer can claim in a year is $1,200,000, based on up to $2,000,000 in qualified child care spending. This is a big step up from the current 25% credit and $150,000 annual cap under existing law.

Clearing the Path and Spreading the News

It's not just about raising the credit amount; the bill also wants to make it easier to use and understand. Section 3 directs the Treasury Secretary to issue guidance, particularly for "multi-employer facilities." This is key for, say, several small businesses in an industrial park that want to pool resources to offer a shared child care center but need clarity on how the tax credit applies to them. Then, Section 4 mandates a public awareness program. Within a year of the bill's enactment, the Treasury has to roll out a campaign to inform businesses about the beefed-up credit and how to file for it. The idea is to make sure companies, big and small, actually know this benefit exists and how to access it.

Looking at the Red Tape

Finally, the bill acknowledges that sometimes good intentions get tangled in bureaucracy. Section 5 tasks the Government Accountability Office (GAO) with a deep dive into the regulatory landscape for child care. Within 12 months, the GAO is to report on state and local licensing requirements, the costs and operational hurdles they create for child care providers (especially those operating in multiple states), and how these rules might be affecting employer participation in the Section 45F tax credit program. The study aims to find ways to reduce these burdens while keeping kids safe and ensuring quality care. It will also offer recommendations on updating regulations, potentially creating more uniformity across states, and smoothing the path for multi-employer setups. This could mean, for example, identifying ways to simplify licensing for a company that wants to offer consistent child care benefits to employees across different state lines, making it more feasible for them to do so.