President Proposes Help for Families Paying for Child Care

Jan 26, 2010

By Hannah Matthews

Yesterday, the Obama Administration announced a new plan to help middle class families struggling during the economic recession. The plan includes doubling the federal Dependent Care Tax Credit (DCTC) and providing a significant increase in the Child Care and Development Block Grant (CCDBG).

Strengthening the economy and getting individuals back to work depends on the availability of affordable child care. Yet, child care is expensive for families at all income levels. Across the country, the average cost of care for an infant in a child care center ranges from $4,560 to $15,895 a year. Child care costs for young children typically account for the largest expense in a household budget--and may be higher than the amount a family pays for food, housing, or college tuition. The president's proposal would address this challenge faced by families across all income levels.

Under the proposal, families earning under $85,000 a year would receive a tax credit for up to 35 percent of their qualifying child or dependent care expenses. The Administration's proposal could be even more effective for families that need the most help by including refundability, which would make the credit available to workers without federal tax liability and increase the value of the credit for workers with lower earnings and limited tax liability.  The credit provided $3.5 billion in child care help to more than six million families in 2007.

In addition to the DCTC expansion, the proposal includes a $1.6 billion increase in CCDBG to provide child care assistance for 235,000 additional children. This would be the single largest increase in funding for CCDBG in more than 20 years. This critical funding would restore help to those families that have lost assistance over the past decade and ensure that working families can keep the jobs they need to support their families. Child care subsidies boost families' incomes and can help families move along a path out of poverty.

This new agenda from the White House signals an important recognition of the daily struggle that American families face in providing care for their family members. Next week, the President will present his FY 2011 budget proposal to Congress. We look forward to learning additional details and the budget's implications for early childhood programs.

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