S.1421 - Child and Dependent Care Tax Credit Enhancement Act of 2025 (119th Congress)
Summary
The Child and Dependent Care Tax Credit Enhancement Act of 2025 (S.1421) proposes significant changes to the existing Child and Dependent Care Tax Credit. These changes include increasing the amount of the credit, making it fully refundable for certain taxpayers, and adjusting income thresholds for the applicable percentage. The bill aims to provide greater financial assistance to families incurring expenses for child and dependent care.
Expected Effects
If enacted, this bill would substantially increase the financial support available to families for child and dependent care expenses. It would also broaden access to the credit by making it refundable, allowing lower-income families to benefit. The adjustments for inflation would help maintain the credit's value over time.
Potential Benefits
- Increased financial assistance for families with child and dependent care expenses.
- Expanded access to the credit for lower-income families through refundability.
- Adjustments for inflation to preserve the credit's value.
- Simplified rules for married couples filing separately.
- Potential positive impact on workforce participation for parents.
Potential Disadvantages
- Increased government spending and potential budget deficits.
- Complexity in administering the refundable credit.
- Potential for fraud or abuse in claiming the credit.
- Possible inflationary effects due to increased demand for childcare services.
- The phase-out structure may still limit benefits for some middle-income families.
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 bill's provisions related to taxation fall under the purview of Article I, Section 8, which grants Congress the power to levy taxes and appropriate funds. The bill does not appear to infringe upon any specific individual rights or liberties protected by the Constitution or its amendments.
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).