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Heinrich Joins Legislation to Reduce Cost of Child Care Through Permanently Expanded Child Tax Credits

To alleviate child care costs for working families, Child and Dependent Care Tax Credit Enhancement Act would permanently expand child care tax credits Bill increases the max credit amount to $4,000 per child, keeps pace with inflation, expands eligibility to low-income families 2021 temporary expansion of Child and Dependent Care Tax Credit resulted in the average tax credit per family quadrupling from $593 to $2,158

WASHINGTONThis week, U.S. Senator Martin Heinrich (D-N.M.) joined legislation led by U.S. Senators Bob Casey (D-Penn.), Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, and Patty Murray (D-Wash.), Chair of the Senate Appropriations Committee, to ease the burden of child care costs on working families by making permanent tax cuts that they successfully fought for in the American Rescue Plan. 

The temporary expansion of a child care tax credit, the Child and Dependent Care Tax Credit, quadrupled the average family’s credit from $593 to $2,158. Those reforms also made low-income families eligible for the credit for the first time by making it refundable. The Child and Dependent Care Tax Credit Enhancement Act would make that expansion permanent.

“We need to level the playing field for our kids—especially in their earliest years—with smart investments that set them up with a strong foundation for long-term academic and career success,” said Heinrich. “The temporary expanded Child Tax Credit that we passed in the American Rescue Plan made a substantial difference in helping parents and families afford the costs of raising a child and giving all of our kids the opportunity to succeed.

Heinrich continued, “I’m proud that New Mexico has set a national example by expanding our state level Child Tax Credit and Working Families Tax Credit. If we want to provide all of our kids with opportunities to succeed, we absolutely need to make our expanded federal investment in the success of our children and their families permanent.”

“We must do everything in our power to put affordable child care within reach for every family, as we did when we expanded tax credits to help families pay for child care in 2021. Child care costs were too high for too many families well before the pandemic and that problem isn’t going away unless we take action to lower costs,” said Casey. “It’s long past time to step up and make the child care tax credit available to everyone at the actual cost of child care today.”

“The cost of raising a family in Oregon and all over the country is way too high, and child care is one of the biggest expenses parents are facing today. People simply need more help,” said Wyden. “Not only is this tax credit an important financial boost for parents, it’s also a matter of economic fairness for workers. The sky-high cost of child care puts way too many American families in a position where Mom or Dad is forced to leave their job to take care of the kids. That should be a choice people make because they want to, not because they need to for financial reasons. Senator Casey’s bill is about giving families more financial breathing room and more freedom to raise their kids and continue their careers in whatever manner they choose.”

“The growing child care crisis is putting incredible strain on families in every corner of the country, and this bill would help get families some additional relief to afford the child care they need,” said Murray. “Senator Casey continues to lead efforts to help lower families’ costs in every possible way, and I am proud to work right alongside him and Senator Wyden in fighting to help make child care affordable and accessible for everyone. Child care is not just a must for families—it’s an urgent economic challenge we must address.”

“Child care is one the greatest expenses parents face, and often comes with a higher cost than what families spend on housing or in-state college tuition. The Child Care and Dependent Tax Credit helps offset the high cost of child care, but is in real need of modernization,” said First Five Years Fund Executive Director Sarah Rittling. “Senator Casey’s Child and Dependent Care Tax Credit Enhancement Act of 2024 is a key part of the solution. The bill makes essential updates to the CDCTC to ensure more parents are able to keep more of what they make and helps make the child care they rely on more affordable. We are grateful for their leadership in supporting families with young children.”

“The Child and Dependent Care Enhancement Act is a step in the right direction towards improving the affordability of high-quality child care for working families. By increasing the maximum value of the credit, families that struggle to meet monthly payments or qualify for public child care subsidy programs will now be able to offset up to $8,000 off their child care expenses,” said Patrick Murray, Vice President of Government Affairs, KinderCare Learning Companies. “KinderCare Learning Companies is proud to support this legislation and appreciative to Senators Bob Casey, Patty Murray, and Ron Wyden for their leadership on this issue.”

“Often conflated with the child tax credit, the Child and Dependent Care Tax Credit is one of the only tax incentives that helps working families with their child care expenses. As the cost of care increases, many families must contend with whether their current job pays enough to justify their child care expenses,” said Radha Mohan, Executive Director, Early Care & Education Consortium. “For families where one parent must leave the workforce because they cannot afford the cost of care, this often hurts the family from an economic standpoint in the long run. The CDCTC Enhancement Act helps ensure that families do not have to make this choice by providing a credit to offset the cost of care.”

The Child and Dependent Care Tax Credit Enhancement Act would increase the maximum credit amount to $4,000 per child; automatically adjust it to keep pace with inflation; save money by phasing-out the credit for families making more than $400,000; and ensure low-income families can benefit from the tax credit by making it refundable, allowing families to receive up to $8,000 each.

In addition to Heinrich, Casey, Wyden, and Murray, the Child and Dependent Care Tax Credit Enhancement Act is cosponsored by U.S. Senators Sheldon Whitehouse (D-R.I.), Tammy Baldwin (D-Wisc.), Richard Blumenthal (D-Conn.), Catherine Cortez Masto (D-Nev.), Dick Durbin (D-Ill.), Mazie Hirono (D-Hawaii), Amy Klobuchar (D-Minn.), Angus King (D-Maine), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Chris Van Hollen (D-Md.), Tina Smith (D-Minn.), and Brian Schatz (D-Hawaii). 

The bill is also endorsed by National Women's Law Center, Child Care Aware, Save the Children, First Focus, Campaign for Children, First Five Years Fund, Moms Rising, NAEYC, Center for Law and Social Policy (CLASP), ROC United, Zero to Three, PA Partnerships for Children, Society for Human Resource Management (SHRM), KinderCare, Early Care and Education Consortium (ECEC).  

Read more about the Child and Dependent Care Tax Credit Enhancement Act here.