Tonight, January 20, 2015 at 9PM Eastern, President Barack Obama will deliver the annual State of the Union address. President Obama's State of the Union address will focus on middle-class economics and provide some new proposals to help families offset the burden of child care costs.
Some of the proposals included in the upcoming State of the Union have been released prior to the speech, including a proposal around the child care tax credit. From the President's fact sheet on the proposal:
"Making Child Care, Education, and Retirement Tax Benefits Work for Middle-Class Families
Simplifying and Expanding Child Care Tax Benefits
With the cost of infant and toddler care rivaling the cost of college in many states, the average child care tax benefit of $550 falls well short of what is needed to provide meaningful help to working families. The Child and Dependent Care Tax Credit and child care flexible spending accounts are also unnecessarily complex, often requiring significant paperwork and advanced planning for families to receive the full benefits.
The President’s tax proposal would streamline child care tax benefits and triple the maximum child care credit for middle class families with young children, increasing it to $3,000 per child. The President’s child care tax proposals would benefit 5.1 million families, helping them cover child care costs for 6.7 million children(including 3.5 million children under 5), through the following reforms:
- Triple the maximum Child and Dependent Care Tax Credit (CDCTC) for families with children under 5, increasing it to $3,000 per child. Families with young children face the highest child care costs. Under the President’s proposal, they could claim a 50 percent credit for up to $6,000 of expenses per child under 5 – covering up to half the cost of child care for preschool age children.
- Make the full credit available to most middle-class families. Under current law, almost no families qualify for the maximum CDCTC. The President’s proposal would make the maximum credit – for young children, older children, and elderly or disabled dependents – available to families with incomes up to $120,000, meaning that most middle-class families could easily determine how much help they can get.
- Eliminate complex child care flexible spending accounts and reinvest the savings in the improved CDCTC. The President’s proposal would replace the current system of complex and duplicative incentives with one generous and simple child care tax benefit.
The President’s child care tax proposal will complement major new investments in the President’s Budget to improve child care quality, access, and affordability for working families."
The full fact sheet can be found here.
