SENATORS INTRODUCE LEGISLATION TO EXPAND TAX CREDIT, HELP FAMILIES AFFORD CHILD CARE

(Washington, DC) – U.S. Senators Jeanne Shaheen (D-NH), Barbara Boxer (D-CA), Patty Murray (D-WA) and Kirsten Gillibrand (D-NY) introduced legislation today to support working families across the country by enhancing the Child and Dependent Care Tax Credit (CDCTC) to help make child care more affordable.  The Helping Working Families Afford Child Care Act addresses the challenge millions of families face in paying for child care by increasing the amount of eligible child care expenses used to calculate the CDCTC, and by expanding the credit to countless low-income families who currently are not eligible.

The bill would adjust the CDCTC, enacted in 1976 to defray the cost of child care for working families, to more accurately account for current child care costs.  The size of the current credit is outdated and does not reflect the rising costs of care faced by today’s working parents, which in some parts of the country can exceed $10,000 annually.

“For working parents juggling work and family obligations, access to affordable child care is a necessity,” Senator Shaheen said. “The rising cost of child care is a challenge for families, children and our economy as a whole. The Helping Working Families Afford Child Care Act would help working parents, especially mothers, afford child care so they can get to work and support their families.”

“This bill will provide relief for families struggling with the rising costs of child care,” Senator Boxer said. “It will also strengthen the economy by making it easier for parents to participate in the workforce.”

“Updating the Child and Dependent Care Tax Credit to reflect the needs of families in today’s economy would be a critical step forward on our larger effort to make sure working parents can succeed on the job and at home, and would help break down one of the biggest barriers many mothers face to re-entering the workforce,” Senator Murray said. “I want to thank Senator Shaheen for her leadership in introducing this important legislation and I hope our colleagues on both sides of the aisle will join us in ensuring that working families get the relief they deserve.”

“America’s workplace policies are stuck in the past and Congress has simply failed to keep up with the pace of the new economy, and the face of the modern American workplace,” Senator Gillibrand said. “Today, more families have two working parents and therefore a greater demand for the affordable child care that allows them to stay on the job. But while the costs skyrocket, wages remain stagnant. It doesn’t have to be this way. We can keep more working parents in their jobs, and more children in quality day care – when we make it affordable – and make our policies reflect today’s reality that both parents have to work for a living. This isn’t a lifestyle choice. This is a fact of financial survival.”

Under the bill, low- and middle-income families would be eligible for a tax credit equal to 20 percent of child care expenses up to $8,000 for one child and $16,000 for two or more children, an increase from the current eligible costs of $3,000 and $6,000, respectively. The legislation would also index the new expense limits for inflation to ensure the reformed credit does not lose value over time. These thresholds have not been increased since 2001.

With the Helping Working Families Afford Child Care Act, families would become eligible for maximum credits of $1,600 of $3,200 in 2015. Additionally, the bill would fix a problem under current law by making the credit fully refundable, enabling more low-income working parents to better afford the child care they need and help boost workplace participation to support their families.

The full text of the bill can be viewed here.