Center for American Progress

RELEASE: CAP Unveils New Child Care Tax Credit Proposal to Expand Access to Child Care for Working Families
Press Release

RELEASE: CAP Unveils New Child Care Tax Credit Proposal to Expand Access to Child Care for Working Families

Washington, D.C. — The Center for American Progress today released a new proposal that would provide a High-Quality Child Care Tax Credit to help low-income and middle-class families afford child care. The proposal would expand child care access to roughly 6 million children under age 5 in the United States, increasing the current service level by more than fourfold while supporting financial security for working families.

“Affordable child care isn’t an issue that just affects women—it’s about economic security for all working families. Right now, child care is unaffordable for many families that need it, with the average annual price of a child care center exceeding $10,000 and growing,” said Carmel Martin, CAP Executive Vice President for Policy. “It’s time for a pathway that will significantly expand access to high-quality child care for those who need it most. When we talk about an inclusive economy, we need to make sure that all parents—men and women—can participate in the workforce.”

“Today, high-quality child care is out of reach for too many families that need child care to support employment and early education. Low-wage workers especially lack options when it comes to choosing child care. CAP’s proposal would put affordable, high-quality child care within reach for millions of families for the first time,” said Katie Hamm, Director of Early Childhood Policy at CAP. “Working families need to know that they can get child care when they need it and that children will be in enriching and nurturing environments to support healthy development and prepare them for school. That’s what the High-Quality Child Care Tax Credit would do—provide economic security to families and peace of mind at the same time.”

In the 12-year period from 2000 to 2012, child care costs for a typical middle-class family grew by $2,300. In its 2014 report, “The Middle-Class Squeeze,” CAP detailed the economic pressures felt by working- and middle-class families as a result of the growing costs of child care and other early childhood programs and supports.

For families earning up to 400 percent of the federal poverty level—equivalent to an annual household income of approximately $97,000 for a family of four—CAP’s proposal would provide up to $14,000 per child under age 3. The size of the tax credit reflects the cost of high-quality child care, builds in higher wages for providers, and would be paid directly to high-quality providers selected by parents. Parents with unpredictable work schedules would be able to use providers that met health and safety standards if a high-quality child care provider was not available during a needed time. Families would contribute up to 12 percent of their income toward child care fees on a sliding scale.

CAP’s proposal for a High-Quality Child Care Tax Credit complements its call for universal, voluntary preschool for all 3- and 4-year-olds, creating access to high-quality early learning programs from birth to kindergarten entry. In addition to improving access to high-quality programs for children, the tax credit would save families thousands of dollars per year, facilitating child care arrangements that support financial security for working families.

As part of the analysis, CAP modeled the child care cost burden reduction for an average family in all 50 states and the District of Columbia with one child and earning $40,000 yearly. The state-by-state analysis can be seen in the Appendix of the report.

Click here to read “A New Vision for Child Care in the United States: A Proposed New Tax Credit to Expand High-Quality Child Care” by Katie Hamm and Carmel Martin.

For more information on this topic or to speak with an expert, contact Allison Preiss at [email protected] or 202.478.6331.