Press Releases

Today, the leadership of the New Democrat Coalition endorsed Congressman Salud Carbajal’s (CA-24) bipartisan legislation aimed at increase access to affordable child care.

The Child Care Investment Act, which was introduced by Carbajal and Congresswoman Lori Chavez-DeRemer (R-OR-05) earlier this year, also has the support of the U.S. Chamber of Commerce and a range of child care advocacy groups.

“Child care is not just a family issue. It is an economic issue,” said Rep. Carbajal, who serves as a Vice Chair for the New Democrat Coalition. “I’m proud to earn the support of the New Dem colleagues as we continue to see there is growing support for updating our tax code to ensure every Central Coast family can get access to quality, affordable child care.”

The bill is also backed by the Bipartisan Policy Center, First Five Years Fund, Early Care & Education Consortium, Learning Care Group, Save the Children, KinderCare, National Association of Women Business Owners, and the Santa Barbara South Coast Chamber of Commerce, Santa Maria Valley Chamber of Commerce, and Ventura Chamber of Commerce.

“As New Dems, we are committed to making sure our tax code empowers hardworking Americans to achieve their financial goals while at the same time strengthening our economy by incentivizing investment and innovation,” said New Dem Chair Annie Kuster (NH-02) and Vice Chair for Policy Derek Kilmer (WA-06). “The bills we’ve endorsed today further this commitment, making much-needed amendments and additions to the tax code that uplift hardworking families, strengthen our economy, and keep America competitive in the global marketplace. New Dems look forward to working with our colleagues across the aisle and the Capitol to secure passage of these bills in future tax legislation.”

You can read more about the other New Dem-endorsed legislation here.

Background:

The Child Care Investment Act improves three existing child care tax incentives to ensure the federal tax code adequately addresses the current realities of child care costs and availability.

·         The bill expands a tax credit aimed at helping businesses provide child care to their workers by increasing the credit’s rate and caps, allowing businesses to jointly create and operate a child care facility for their employees, and adding in-home services as an eligible use.

• Currently, the Employer-Provided Child Care Credit only allows for a business to receive tax credits for contracting with an existing child care provider or creating their own facility.

·         The bill doubles the amount of money that can be saved by a family in a tax-exempt Dependent Care Flexible Spending Account (DCAP) to cover child care expenses up to $10,000 annually, more accurately reflecting the average cost of child care in the U.S.

• The bill also allows an additional $2,000 in DCAP savings per each additional dependent.
• The current $5,000 annual cap has remained unchanged since the 1980s, when the dependent care savings account was first created.

·         The bipartisan proposal also improves the Child and Dependent Care Tax Credit, an existing tax write-off for Americans to offset child care expenses.

• The current rates would be increased for all eligible incomes, with a family  with two children eligible to get up to $3,000 in credits for child care expenses.
• The bill would also make the credit fully refundable and index the bill’s increased tax credits to inflation.

A more detailed summary of the bill proposed tax credit changes can be found HERE.

The inspiration for this bill came from roundtables held by Rep. Carbajal in July 2022 discussing the impacts of inflation with small business owners in Santa Barbara and San Luis Obispo County, who conveyed that child care was one of their top concerns when it came to current business and hiring conditions.