At the end of May, the House of Representatives voted (215–214) to pass their budget reconciliation bill, the One Big Beautiful Bill Act (H.R. 1). While Congress had the opportunity to make meaningful policy changes that would improve the lives of working families, young children, and the people that care for them every day, this bill does not deliver.
CCAoA is disappointed that the House of Representative’s budget reconciliation bill fails to include an increase in the Child and Dependent Care Tax Credit (CDCTC), the only tax credit designed specifically to help parents offset the cost of child care, missing the opportunity to bolster a critical support for working families struggling with the high cost of child care.
After threats that the bill might make cuts to Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG), potentially impacting federal funding used by states for child care, the final bill does not make any direct cuts to those programs.
There are provisions included in the bill that aim to assist some families.
- CTC Expanded, Not All Families Benefit: The bill makes permanent the current level of $2,000 for the Child Tax Credit (CTC). From 2025-28, it also includes a temporary $500 boost to the credit ($2,500 per child); in 2029, the credit reverts to $2,000 per child. The refundable portion of the credit continues to be indexed to inflation, but the $500 nonrefundable credit for other dependents is not. The bill also changes eligibility requirements so that now both the qualifying child and parent need a Social Security Number (SSN) to be able to claim the credit. Previously only the qualifying child needed an SSN.
- Employer Child Care Support: The bill increases the maximum Employer-Provided Child Care Credit (45F) from $150,000 to $600,000 for small businesses and to $500,000 for all others. It also increases the percentage of qualified child care expenses covered from 25 percent to 50 percent for small businesses and to 40 percent for all others. Additionally, this provision allows for jointly owned and operated small businesses to pool their resources to provide child care to their employees and for businesses to use a third-party intermediary to facilitate child care services on their behalf.
However, many provisions in the bill fall short or actively undermine families’ well-being.
- Millions of families will not benefit from the proposed expansion of the Child Tax Credit, leaving behind those who need help the most. The policy would block as many as 20 million children in working families from receiving the full $2,500 Child Tax Credit included in the bill because their parents don’t earn enough. Under current law, 17 million children don’t currently get the full $2,000 Child Tax Credit, and they would get nothing from the bill’s $500-per-child increase in the credit, even as families earning up to $400,000 would get the full increase. The bill would also strip 4.5 million children who are U.S. citizens or lawful permanent residents of eligibility for the Child Tax Credit if even one of their parents lacks a Social Security number, according to estimates by the Center for Migration Studies.
- The bill would slash $300 billion (nearly 30%) from the Supplemental Nutrition Assistance Program (SNAP), the nation’s most effective anti-hunger program, and impose an unprecedented cost shift to state and local governments. Permanently changing the structure of SNAP and slashing billions over the next decade will take food off the table for millions of children and families, as well as harm the overall economy.
- Medicaid also faces the largest cut in its history. According to analysis from the Center for Children & Families (CCF) of the Georgetown University McCourt School of Public Policy the changes will result in a loss of health coverage for millions. Nearly 28 percent of child care workers are covered by Medicaid. At least 13 states cover more than one-third of the child care workforce through Medicaid, making the program an essential part of ensuring the health and well-being of child care professionals. Additionally, families will face added administrative barriers and interruption in services with the inclusion of nationwide work requirements for the first time in the program’s history.
If the House-passed reconciliation bill becomes law, millions of children and families who rely on these programs will lose critical lifelines. The bill cuts back on federal investments in these programs and will create budget crises for states to attempt to make up the differences, potentially resulting in additional program cuts and leaving families that are already struggling to make ends meet with even fewer options.
While improvements to the Employer-Provided Child Care Credit (45F) will help employers to partner in addressing the child care challenges of their workforce, there remains a significant need to strengthen the tax credit that specifically and directly helps working families offset the cost of child care, the CDCTC. 45F would be most effective when paired with the CDCTC, which is why most legislative proposals include both working together. Without meaningful improvements to the CDCTC, this bill misses a critical opportunity to deliver real relief to families for whom child care remains one of largest monthly expenses.
We are now looking to the Senate to reject the cuts to programs that support the livelihood of children and families that are included in the House bill and explore solutions that strengthen access to the programs that children and families need.
Child care-specific tax credits, especially the CDCTC, are relied upon by millions of families and are popular on both sides of the aisle. CCAoA is urging the Senate to do what the House failed to do and protect and enhance child care-specific credits while negotiating and revising this sweeping piece of legislation to better meet the needs of American families.
As Senators begin working on the reconciliation package, they need to hear from you! Tell the Senate to prioritize families and update the CDCTC. Ready to take action now? Use our simple forms to email your lawmakers now.