Combating High Inflation Limiting Daycare Act of 2025 or the CHILD Act of 2025This bill increases the maximum annual amount that may be contributed to a dependent care assistance program (generally known as a dependent care flexible spending account [FSA]).Under the bill, the maximum annual amount that may be contributed to a dependent care FSA increases from $5,000 ($2,500 for married taxpayers who file separate federal tax returns) to $10,000 ($5,000 for married taxpayers who file separate federal tax returns) and is adjusted annually for inflation.
The most notable impact of HB 413 is its indexing of dependent care assistance contributions to inflation. This indexing means that the contribution limits will automatically adjust each year based on the cost-of-living adjustments defined by the IRS. Such a provision enables families to receive assistance that not only maintains but potentially increases their financial support over time, alleviating the financial strain associated with child care. Furthermore, it is expected that these changes will encourage more families to take advantage of existing dependent care tax credits, ultimately making childcare more accessible.
House Bill 413, titled the CHILD Act of 2025 or the Combating High Inflation Limiting Daycare Act of 2025, proposes significant changes to the Internal Revenue Code of 1986 to enhance the support provided through dependent care assistance programs. The bill primarily aims to double the maximum contribution limit for these programs, increasing it from $5,000 to $10,000. This increase seeks to provide families with more substantial financial support in managing childcare expenses, which have become increasingly burdensome due to inflation and rising costs of living.
While the bill garners support for its intent to alleviate the financial burden on families, there are potential points of contention regarding its implementation and effectiveness. Critics may argue that simply increasing the contribution limits does not solve the underlying issues of childcare affordability and availability. Additionally, some lawmakers may question the fiscal impact of doubling contribution limits on government revenues, as increased use of tax credits could decrease federal revenue. Therefore, the balance between supporting families and ensuring fiscal responsibility could be a central point of debate as the bill progresses through legislative channels.