Taxwriters on the House Ways and Means Committee have introduced a bipartisan bill that would increase the maximum amount of pre-tax dollars employees can set aside for dependent care. The Working Families Relief Bill (HR 2618) was introduced by Rep. Mike Kelly, R-Pa., and House Democratic Caucus Vice Chair Linda Sanchez, D-Calif.
The bill would raise the cap for the Dependent Care Assistance Program (DCAP), a flexible spending account that can be used to pay for child care on a pre-tax basis, from $5,000 to $10,500. The bill would also provide tax credits to small employers for DCAP startup costs and to certain employers that match DCAP contributions.
“As Congress works closer toward achieving pro-growth tax reform to rebuild our economy, this bill is about making sure our tax code is firmly on the side of our nation’s most precious asset—our children—and the hardworking parents who love and support them,” Kelly said in a statement. HR 2618 would expand and modernize DCAP accounts, according to Kelly.
“The Working Families Relief (Bill) seeks to make childcare a little more affordable for working families,” Sanchez said. Both members introduced a similar measure during the 114th Congress.
Kelly and Mark Shriver, president of Save the Children Action Network, noted in a joint op-ed that, although they come from “opposite sides of the political aisle,” they both agree that helping families afford child care or early education programs should be a bipartisan goal. “While the federal tax code has some provisions that help families afford early child care, more can be done to assist low-income families with little to no income tax liability, for whom existing tax credits are of little help,” they added.
Both the House GOP tax reform blueprint and the Trump administration have signaled a shift toward an increased emphasis in tax-preferred savings accounts. This bill could potentially become a bipartisan contribution toward a larger tax reform package or stand alone as separate legislation.