WASHINGTON, D.C. – Recently, U.S. Senator Thom Tillis (R-NC) co-sponsored the Improving Child Care For Working Families Act, bipartisan, bicameral legislation that increases the amount of tax-free dollars working parents and their employers can set aside in a dependent care assistance plan (DCAP) to use toward child care expenses.
The Improving Child Care For Working Families Act was introduced by U.S. Senators Joni Ernst (R-IA) and Maggie Hassan (D-NH) and also co-sponsored by U.S. Senator Kyrsten Sinema (D-AZ). Companion legislation was introduced in the House by U.S. Representatives Cindy Axne (D-IA) and Brian Fitzpatrick (R-PA).
"The COVID-19 pandemic underscored why working parents need readily-available, affordable child care that is safe for both children and staff," said Senator Tillis. "This legislation ensures children have better access to a safe learning environment by permanently increasing the DCAP cap so that parents can set aside a larger amount of their pretax income to pay for child care."
Background:
Even before the pandemic, child care was becoming increasingly expensive for families. Nationwide, infant care is more expensive than tuition at a four-year public college in 33 states. COVID-19 has heightened the challenges families face when looking for affordable, quality child care. Many child care providers have had to shutter or reduce their enrollment.
To address the rising costs of child care, families are increasingly making use of dependent care assistance plans (DCAPs), which allow working families and their employers to set aside tax-free dollars toward qualifying child and dependent care expenses. However, tax-free DCAP contributions have been limited to $5,000 annually since 1986, which only covers half the annual cost of child care today.
While the DCAP limit has been lifted to $10,500, this change only applies for 2021. This relief is an important first step, but families will continue to struggle with the cost of child care unless we offer lasting relief. That’s why the Improving Child Care for Working Families Act allows families to put more tax-free dollars toward child care by permanently raising the DCAP contribution limit to $10,500.
The Improving Child Care for Working Families Act is supported by the Bipartisan Policy Center, Save the Children Action Network, Early Care and Education Consortium, Employers Council on Flexible Compensation, National Taxpayers Union, and HealthEquity.
The Improving Child Care For Working Families Act was introduced by U.S. Senators Joni Ernst (R-IA) and Maggie Hassan (D-NH) and also co-sponsored by U.S. Senator Kyrsten Sinema (D-AZ). Companion legislation was introduced in the House by U.S. Representatives Cindy Axne (D-IA) and Brian Fitzpatrick (R-PA).
"The COVID-19 pandemic underscored why working parents need readily-available, affordable child care that is safe for both children and staff," said Senator Tillis. "This legislation ensures children have better access to a safe learning environment by permanently increasing the DCAP cap so that parents can set aside a larger amount of their pretax income to pay for child care."
Background:
Even before the pandemic, child care was becoming increasingly expensive for families. Nationwide, infant care is more expensive than tuition at a four-year public college in 33 states. COVID-19 has heightened the challenges families face when looking for affordable, quality child care. Many child care providers have had to shutter or reduce their enrollment.
To address the rising costs of child care, families are increasingly making use of dependent care assistance plans (DCAPs), which allow working families and their employers to set aside tax-free dollars toward qualifying child and dependent care expenses. However, tax-free DCAP contributions have been limited to $5,000 annually since 1986, which only covers half the annual cost of child care today.
While the DCAP limit has been lifted to $10,500, this change only applies for 2021. This relief is an important first step, but families will continue to struggle with the cost of child care unless we offer lasting relief. That’s why the Improving Child Care for Working Families Act allows families to put more tax-free dollars toward child care by permanently raising the DCAP contribution limit to $10,500.
The Improving Child Care for Working Families Act is supported by the Bipartisan Policy Center, Save the Children Action Network, Early Care and Education Consortium, Employers Council on Flexible Compensation, National Taxpayers Union, and HealthEquity.
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