H.R.2900 - Promoting Affordable Childcare for Everyone Act; PACE Act (119th Congress)
Summary
H.R.2900, also known as the Promoting Affordable Childcare for Everyone Act or the PACE Act, aims to amend the Internal Revenue Code of 1986 to enhance childcare affordability. The bill focuses on increasing and making fully refundable the Child and Dependent Care Tax Credit. It also seeks to increase the maximum amount excludable from gross income for employer-provided dependent care assistance.
Expected Effects
If enacted, the PACE Act would provide greater financial relief to families incurring childcare expenses. The increased tax credit refundability and higher exclusion for employer-provided assistance would lower the overall cost of childcare. These changes are set to take effect for taxable years beginning after December 31, 2025.
Potential Benefits
- Increased financial assistance for families with childcare expenses.
- Greater access to affordable childcare, potentially enabling more parents to work or pursue education.
- Stimulation of the economy through increased consumer spending due to tax savings.
- Simplification of tax processes related to childcare credits.
- Potential reduction in poverty among families with young children.
Potential Disadvantages
- Potential increase in government spending and budget deficits.
- Possible complexity in administering the enhanced tax credit.
- Risk that childcare providers may increase prices in response to increased subsidies.
- Inflation adjustments may not keep pace with actual childcare cost increases.
- The benefits may disproportionately favor higher-income families who already utilize dependent care assistance programs.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Constitution's general welfare clause (Preamble). Congress has the power to lay and collect taxes to provide for the general welfare of the United States. The specific provisions of the bill relate to tax credits and exclusions, which fall under Congress's authority to regulate taxation (Article I, Section 8).
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).