U.S. child care tax breaks see low uptake, congressional report says
High child care costs continue to weigh on U.S. families and employers as existing tax incentives remain lightly used. The issue carries broader economic stakes, with a shortage of available child care projected to cost the U.S. economy up to $329 billion over the next 10 years.
Highlights
- Only 13% of private sector workers have access to employer-provided child care benefits, and just 12% of eligible taxpayers claim the CDCTC.
- The child and dependent care tax credit covers up to $3,000 in expenses for one individual or $6,000 for two or more, but remains underutilized.
- A 2025 Bipartisan Policy Center report projects inadequate child care could cost the U.S. economy up to $329 billion over the next decade.
Congressional findings on tax credit use
As reported by the U.S. Congress Joint Economic Committee, Minority, existing child care tax incentives are underused or difficult for businesses and workers to navigate. The report says only 13% of private sector workers have access to child care benefits through their employers.Eligible workers may be able to reduce expenses through the child and dependent care tax credit, or CDCTC. The credit allows qualifying families to offset part of child care and dependent care costs against federal income tax liability, covering up to $3,000 in expenses for one qualifying individual and up to $6,000 for two or more.
The report says only about 12% of taxpayers with children claim the CDCTC. It also points to dependent care assistance program accounts, or DCAPs, which let employees set aside pre-tax income for child care expenses, and to the separate employer-provided tax credit known as 45F.
Economic pressure on families and employers
Limited use of those incentives comes as child care remains costly for both households and businesses. The report frames stronger use of existing tax provisions as one available way for families and employers to ease some of that burden.A 2025 Bipartisan Policy Center report found that a lack of available child care could cost the U.S. economy up to $329 billion over the next decade. That estimate underscores how child care access affects not only household budgets, but also labor participation and employer costs across the broader economy.
Our earlier article on the GOP’s emerging pro-worker labor push focused on proposals such as the Faster Labor Contracts Act and Senator Josh Hawley’s calls for tougher penalties for labor-law violations and clearer worker protections in an AI-driven workplace. We also noted the limits of that shift inside the party, with tensions persisting between worker-focused rhetoric and alliances with big business and technology interests ahead of upcoming elections.
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