H.R. 10657: Supporting Early Childhood Education Opportunities through Upfront Tax Deductions Act of 2026

This bill would change federal tax rules to let businesses and other taxpayers deduct the full cost of certain newly built or newly placed-in-service early childhood education centers all at once, instead of spreading the deduction out over many years.

What the tax break would do

Under current law, property like buildings is usually depreciated over time. This bill would create a special rule for qualified early childhood education centers, allowing a taxpayer who chooses this option to take a 100% depreciation deduction in the year the property is placed in service.

In plain terms, that means the taxpayer could write off the entire eligible cost up front for federal income tax purposes.

What property would qualify

The bill defines a qualified early childhood education center as part of nonresidential real property that:

• is used as part of an early childhood education center licensed by a state to care for children under age 5;
• if the taxpayer is not the licensed operator, is covered by a written binding contract with a licensed provider before construction begins;
• is located in the United States or a U.S. territory;
• is specifically designated by the taxpayer for this tax treatment;
• has its original use begin with the taxpayer; and
• is placed in service before December 31, 2031.

What would not qualify

The bill says the special treatment would not apply to nonresidential property that is not part of a building where child care is provided. In other words, ordinary office space or unrelated portions of a building would not be included just because they are owned by the same taxpayer.

Other tax rule changes

The bill would also amend another tax provision so that a qualified early childhood education center is treated as a type of property that can be subject to certain depreciation recapture rules under section 1245 of the tax code. This affects how some gains may be taxed later if the property is sold or otherwise disposed of after the deduction is taken.

Timing and implementation

The new rules would apply only to property placed in service after the bill becomes law. The Treasury Secretary would be allowed to issue regulations or other guidance to carry out the law. The bill also lets the Secretary extend the deadline in cases where an “act of God” prevents the property from being placed in service on time.

Relevant Companies

None found