A report from the U.S. Congress Joint Economic Committee — Minority reveals that only 13% of private sector workers have access to child care benefits, despite existing tax incentives that could help reduce child care costs.
The Child and Dependent Care Tax Credit (CDCTC) allows eligible families to offset a portion of their child care expenses against their federal income tax, yet only about 12% of taxpayers with children claim it.
Additionally, dependent care assistance programs (DCAP) enable families to set aside up to $7,500 in pre-tax income for child care, but fewer than half of private-sector workers have access to these accounts.
The report also highlights the 45F tax credit, which allows businesses to deduct a significant percentage of their child care expenses, yet less than 1% of corporate returns utilized this program. By fully leveraging these tax incentives, businesses could save substantial amounts in taxes and improve employee retention and productivity, while parents could save nearly $10,000 over five years.
The report follows a proposal by Senators Maggie Hassan and Dan Sullivan to create a liaison at the IRS to help businesses navigate these tax incentives