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H.R. 1296: Expanding Child Care Access Act of 2025

This bill, known as the Expanding Child Care Access Act of 2025, aims to introduce financial support for individuals who start licensed family child care services by providing a tax credit for related expenses. Here’s a breakdown of what the bill entails:

Tax Credit for Child Care Startup Expenses

The bill proposes to create a new tax credit, termed the "Licensed Family Child Care Credit," allowing qualified taxpayers to claim a credit of up to $5,000 for certain child care startup expenses. This credit can be used for expenses incurred in the current tax year or the previous tax year.

Who Qualifies?

A “qualified taxpayer” is defined in the bill as someone who operates a "qualified family child care provider." To meet this definition, the provider must:

Offer child care services for compensation while being licensed or registered according to state law.
Primarily provide care in the taxpayer’s own home.
Care for at least two children who are not the taxpayer's own for a significant part of the year.

What Expenses Are Covered?

The types of expenses that qualify for this tax credit include:

Licensing fees for child care.
Child care supplies (such as diapers, food, toys, and educational materials).
Liability insurance costs.
Fencing and installation expenses.
Outdoor playground equipment and installation.
Furniture necessary for child care.
Salary for employees (not including the taxpayer).
Computers and printers.
Professional training required by state licensing.
Remodeling or renovation of the taxpayer's home as a licensing requirement.

Limitations and Conditions

There are specific limitations under this proposal:

A taxpayer cannot claim the credit if they received it in a prior tax year.
Expenses cannot be claimed if they are eligible for another deduction or credit under existing tax regulations.

Regulatory Provisions

The bill empowers the Secretary of the Treasury to issue regulations necessary for implementing the credit, which could include coordination with state and local child care licensing bodies.

Expiration of the Credit

The tax credit would be available for seven years following the enactment of the bill. After this period, it would no longer be applicable for tax years beginning after the seventh year.