As conversations about tax reform in 2025 begin to heat up, childcare-related tax credits are sure to be a hot topic. The U.S. Senate recently announced a bipartisan tax bill dubbed the Child Care Availability and Affordability Act. It would enhance three existing tax provisions: the Child and Dependent Care Tax Credit (CDCTC), the Dependent Care Assistance Program (DCAP), and the Employer-Provided Child Care Tax Credit (EPCCTC). Among other things, the bill would increase the size of the CDCTC and make it refundable, allow families to deduct 50% more in expenses (up to $7,500) under DCAP, and bolster the EPCCTC to encourage businesses to provide childcare to their employees. Stay tuned.
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