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As President Donald Trump embraces extra policy focused on affordability, some lawmakers have pushed to expand tax credits for households.
The Republican Examine Committee this week released a framework for a second price range invoice, often known as “Reconciliation 2.0,” which outlines priorities like homeownership, health care, power costs and monetary assist for households. One other reconciliation invoice has support from Home Speaker Mike Johnson and Home Finances Committee Chairman Jodey Arrington, R-Texas., amongst others.
One proposal from the framework would increase entry to the child and dependent care tax credit, or CDCTC, which partially offsets as much as $6,000 of care bills for 2 or extra “qualifying people” — usually children under age 13 — when mother and father who file taxes collectively each work.
The CDCTC is commonly confused with the child tax credit, or CTC, of as much as $2,200 per baby underneath age 17 for the 2025 tax year. One key distinction is the CTC would not require each mother and father who file taxes collectively to earn revenue.
The proposal comes throughout a mid-term election yr as Republicans battle to defend a razor-thin majority within the Home. Each events are pushing messaging about affordability as many People wrestle with the price of housing, meals, electrical energy and well being care.
Listed here are some key issues to know concerning the baby and dependent care tax credit score, and the way it may change underneath the Republican Examine Committee’s framework.
Who advantages from the CDCTC
Solely a small proportion of households declare the kid and dependent care tax credit score every year.
Roughly 6.5 million returns filed the shape to assert the kid and dependent care tax credit score for tax yr 2022, in accordance with the newest IRS estimates. By comparability, almost 37 million returns claimed the kid tax credit score or credit for other dependents.
Presently, about 13% of families with children obtain the kid and dependent care tax credit score, in accordance with a 2025 Tax Coverage Middle evaluation. That is in comparison with virtually 90% of families with children who obtain the kid tax credit score.
Whereas Trump’s “huge lovely invoice” expanded each tax credit, “there’s nonetheless plenty of curiosity in additional reforms,” in accordance with Garrett Watson, director of coverage evaluation on the Tax Basis, a nonprofit assume tank.
How the CDCTC may change
The Republican framework goals to increase baby and dependent care tax credit score eligibility by eradicating the work requirement for each mother and father who file taxes collectively.
If enacted, this is able to finish the “marriage penalty” to assist stay-at-home mother and father and younger households, in accordance with the define. Nonetheless, it is unclear whether or not Reconciliation 2.0 will occur in 2026 amid competing legislative priorities, consultants say.
Usually, marriage penalties create a better tax burden for married {couples} submitting collectively in comparison with their taxes owed when submitting as single people.
“This is not a wedding penalty like that,” stated Margot Crandall-Hollick, a principal analysis affiliate on the City-Brookings Tax Coverage Middle. “It’s an elimination of a piece requirement for reasonable and higher-income married {couples}.”
Presently, the kid and dependent care tax credit score is non-refundable, which suggests the profit is restricted by a return’s complete taxes owed. Non-refundable credit are usually much less useful to lower-income households as a result of they usually owe little to no revenue taxes, stated Crandall-Hollick.
Whereas there’s been bipartisan interest to make the credit score refundable, that change wasn’t included within the ultimate model of Trump’s “huge lovely invoice,” she stated.
