Senators Call for Expanded Child Tax Credit of Up to $150,000; Here’s How It Works

Child Tax Credit employer child tax credit

By Danielle Ong , Parent Herald Sep 27, 07:19 am

A bipartisan group of U.S. senators is now working to expand a child tax credit program that would help workers afford child care.

A recent proposal would give incentives to businesses in rural and lower-income areas if they provide employees with childcare facilities in their workplaces. The incentive would grant employers up to $150,000 a month or $1.2 million a year in tax credits. The amount would depend on the size of the business.

For the new legislation, Sen. Michael Bennet, D-CO, teamed up with Sen. Marsha Blackburn, R-TN, as reported by The Hill.

Bennet introduced a separate legislation in 2019 that sought to overhaul the existing Child Tax Credit and expand the amount to $300 per month for children under age 6 for a total of $3,600 per year. At the time, he teamed up with Sen. Sherrod Brown, D-OH, in an effort to make childcare services more affordable.

For perspective, childcare services typically cost American households $700 a month, on average. In some states and cities, this can go up to $1,600.

Other Child Tax Credit Bills

Bennet was not the only senator to have proposed expanding employer-child tax credits. Sens. Tim Kaine, D-VA, and Katie Britt, R-AL, also introduced the Child Care Affordability and Availability Act that would increase the maximum credit for businesses to $500,000 from $150,000.

If passed, that bill would also expand the share of childcare expenses covered to 50% from the current 25%. Furthermore, the bill would offer small businesses filing for joint applications a maximum credit of $600,000.

How Popular Are Employer Child Tax Credits?

Despite providing businesses tax credits, the take-up rates of the 45F credit are low. In fact, only 11% of companies said they offered any on-site childcare facility, per a 2023 report. Among companies with over 1,000 workers, the take-up rate rises to only 16%.

Of all types of businesses, those in the education sector had the largest share of on-site childcare facilities with a 90% take-up rate, the report noted.