Improving Child Care for Working Families Act of 2025
Summary
The "Improving Child Care for Working Families Act of 2025" proposes amending the Internal Revenue Code of 1986 to increase the exclusion limit for dependent care assistance programs. Specifically, it aims to raise the exclusion from $7,500 to $10,500 for single individuals and from $3,750 to half of $10,500 for married individuals filing separately. The bill was introduced in the House of Representatives and referred to the Committee on Ways and Means.
Expected Effects
The primary effect of this bill, if enacted, would be to provide a larger tax benefit to working families who utilize dependent care assistance programs. This could reduce their tax burden and potentially make childcare more affordable. The change applies to calendar years beginning after the enactment date.
Potential Benefits
- Increased tax savings for eligible working families.
- Potentially improved affordability of childcare services.
- Greater financial flexibility for families managing dependent care expenses.
- Could incentivize workforce participation among parents.
- Simplifies tax calculations related to dependent care assistance programs.
Most Benefited Areas:
Potential Disadvantages
- The increased exclusion may disproportionately benefit higher-income families who are more likely to utilize dependent care assistance programs.
- Potential revenue loss for the government due to increased tax exclusions.
- May not significantly impact low-income families who do not have access to employer-sponsored dependent care assistance programs.
- The bill does not address the underlying high cost of childcare itself.
- The benefits are limited to those who are eligible for and utilize dependent care assistance programs.
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill aims to promote the general welfare by providing tax relief to working families with dependent care expenses. It does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).