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Today, Congressional Hispanic Caucus (CHC) Chair Nanette Barragán (CA-44) announced the CHC endorsement of bipartisan legislation written by Congressman Salud Carbajal (CA-24) to increase access to quality child care and lower cost of care for American families.

The Child Care Investment Act, which was introduced by Carbajal with Rep. Lori Chavez-DeRemer (R-OR) last summer, has the support of the Problem Solvers Caucus, the New Democrat Coalition, the U.S. Chamber of Commerce, the Bipartisan Policy Center, and a range of child care advocacy groups.

"The lack of affordable quality child care is hurting Latino families and the American economy – with more than a $120 billion lost every year,” said Chair Nanette Barragán. “A recent study found that as child care costs have risen more than 200% in the last 30 years, more than 3 in every 20 Latino toddlers are living with a family member who quit their job or made a job choice based on their child care options. The Child Care Investment Act recognizes that Congress has not kept up with the child care realities of our nation and of the Latino communities that our caucus represents; and it implements commonsense changes to our tax code to ensure we help families who are struggling to stay afloat while balancing their jobs with the their family’s needs."

“Child care is not just a family issue. It is an economic issue,” said Congressman Carbajal.“I’m proud to earn the support of my colleagues in the Congressional Hispanic Caucus as we continue to see there is growing need for updating our tax code to ensure every Central Coast family can get access to quality, affordable child care. The momentum for this bill is growing, and I’m proud to see more members recognizing this bill as a commonsense way to revise our tax code and support our working families.”

The bill is also backed by the 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, San Luis Obispo Chamber of Commerce, and Ventura Chamber of Commerce.

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.