H.R. 3155: Child Care for American Families Act

This bill, known as the Child Care for American Families Act, aims to amend the existing tax code to enhance the employer-provided child care credit. Here are the key provisions of the bill:

Increased Tax Credit Rates

The bill proposes to increase the percentage of expenses that employers can claim as a tax credit for providing child care services. The current rate of 25% would be adjusted to a tiered system:

• 40% for general qualified child care expenditures.
• 50% for qualified expenditures made by eligible small businesses.
• 60% for expenditures associated with qualified child care facilities located in designated eligible areas.

Definitions and Criteria

To qualify for the increased credit:

• An eligible small business is defined as a business with 500 or fewer employees over the last two years.
• An eligible area is defined as a rural county or specific census tracts.

Dollar Limitations on Credits

The bill places limits on the amount that can be claimed:

• The overall credit for any taxable year cannot exceed $1,200,000.
• The total qualified child care expenditures that can be considered for the credit are capped at $2,000,000 for any taxable year.

Implementation Timeline

The changes proposed by this bill would apply to taxable years starting after the bill's enactment.

Guidance for Multi-Employer Facilities

The Secretary of the Treasury would issue guidelines to effectively implement the new regulations, particularly for multi-employer facilities that want to utilize the child care credit.

Public Awareness Program

The Treasury Department would be required to establish a public awareness initiative within one year of the bill's enactment. This program would inform taxpayers about:

• The availability of the employer-provided child care credit.
• The procedures for filing for such credits.

GAO Study on Regulatory Barriers

The bill calls for a study conducted by the Government Accountability Office (GAO) within a year of enactment. This study would evaluate:

• Licensing and regulatory requirements affecting child care facilities.
• Compliance costs and operational barriers for multi-state child care providers.
• Possible ways to reduce regulatory burdens while maintaining standards.

The report will also include recommendations to enhance child care regulations, promote uniformity across states, and reduce barriers for multi-employer and multi-state facilities aiming to use the child care credit.

Relevant Companies

None found.