Tax Policy and Child Care
Overview
Strong funding is essential to strengthening child care in the United States, but updating provisions of the federal tax code is also an important part of the solution.
- The Child and Dependent Care Tax Credit (CDCTC) is the only tax credit designed specifically to help parents offset the cost of child care.
- The Dependent Care Assistance Program (DCAP) allows some working parents to set aside a small amount of their pre-tax paycheck to pay for child care expenses (including employer-sponsored child care contributions).
- The Employer-Provided Child Care Credit (known as 45F) supports businesses who want to locate or provide child care for their workforce, while also increasing the number of child care slots available in their community.
These provisions were updated in July 2025 as part of the tax reconciliation bill in Congress, permanently improving three pieces of tax policy that help make child care more affordable for working families with young children.
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Tax Policy
FFYF Capsule Collection: Tax Policy and Child Care
In A Nutshell With two-thirds of children ages five and under living in homes where all available parents are working, child care is not optional for most families – it’s …
TOPLINES: Child Care in the 2025 Tax Reconciliation Package
The final version of the 2025 tax reconciliation package (also known as H.R.1) was signed into law on July 4th, 2025. The bill permanently improves three pieces of tax policy …
Child Care and the Federal Tax Code
Millions of families across the United States need child care. Yet for too many, child care is hard to find and even harder to afford. Congress can lead the way. …
Employer-Provided Child Care Credit (45F)
The Expanded 45F Tax Credit: What Providers and Employers Need to Know
This resource explains how the expanded 45F tax credit works and how employers and providers can get started.
How 45F Helps Employers Strengthen Child Care Options
Reliable child care is essential for today’s workforce: two-thirds of young children in the U.S. live in households where all available parents are working. But too often, families struggle to …
The First Five Things to Know About: Employer-Provided Child Care Credit (45F)
In the United States, two-thirds of young children live in households where all available parents are working. meaning child care is essential for families’ ability to stay in the workforce. …
Employer-Provided Child Care Credit (45F): Overview
The Employer-Provided Child Care Credit, also known as 45F, is one way to address the needs of both working parents and employers. Under 45F, employers receive a tax credit for …
Child and Dependent Care Tax Credit (CDCTC)
Child and Dependent Care Tax Credit (CDCTC): Overview
With the average annual cost exceeding $13,000 per child, millions of American families struggle to afford quality child care. The Child and Dependent Care Tax Credit (CDCTC) provides some financial …
State-By-State: A Look At How Many Families Receive the Child and Dependent Care Tax Credit (CDCTC)
The Child and Dependent Care Tax Credit (CDCTC) helps millions of working families cover a portion of their child care costs. In 2022, more than 5.7 million families nationwide benefitted …
Child and Dependent Care Tax Credit (CDCTC): Maximum Credit Amounts for Families
The Child and Dependent Care Tax Credit (CDCTC) allows working families to keep more of what they earn to pay for child care. A family’s credit depends on four factors: …
Dependent Care Assistance Program (DCAP)
Dependent Care Assistance Program (DCAP): Overview
Through flexible spending accounts, the DCAP exclusion gives parents flexibility to choose the type of care that best suits their needs — whether that’s a licensed child care center, home-based …
