On Thursday, January 22, the President’ released a child care expansion proposal to build on his support for an expanded child care tax credit first announced at the state of the Union Address on Tuesday of last week.

Under the new proposal the President would provide significant increases to the child care block grant, the CCDBG. As a result all families with incomes up to 200 percent of poverty and children under age four would be able to receive child care subsidies (if parents are working, attending school or job training). The proposal, if enacted would expand access to 1 million more children by 2025 while also increasing quality of that child care. There are approximately 1.6 million children covered by subsidies today with the number stagnant over the past decade and a half.   The plan would condition the greater funding on requirements to build the supply of high-quality care for infants and toddlers; a population that is underserved and is not addressed in pre-k proposals.  In addition to expanded services including infant and toddler care the President’s proposal would attempt to fund some of the new requirements under last year’s CCDBG reauthorization which steps up standards and health and safety requirements.

Earlier in the week the President called for an expanded child care credit which is designed to compliment and wrap around the expanded child care funding.  The current child care tax credit would be expanded for families with children under 5 years of age with a maximum tax credit of $3,000 per child based on a claim of 50 percent of the cost of child care up to $6,000 of for each child.  The maximum credit would be available to families with income up to $120,000. The credit builds on the increased subsidies because it would remain non-refundable, which means that families with incomes too low to owe federal income taxes would not benefit from the credit but those are the families most likely to benefit from the expanded CCDBG funding.

Under current law families with children under age 13 are eligible to claim a maximum credit of $1,050 for one child and $2,100 for two or more children.  The maximum credit is based on claiming up to 35 percent of the cost for the first $3000 in child care expenses for one child and $6,000 in expenses for two or more children.  The maximum credits of $1,050/$2100 are available to families with incomes up to $15,000 as it is gradually reduced as income increases.