{"id":10401,"date":"2025-08-12T17:59:26","date_gmt":"2025-08-12T17:59:26","guid":{"rendered":"https:\/\/www.care.com\/benefits\/?p=10401"},"modified":"2025-08-12T17:59:26","modified_gmt":"2025-08-12T17:59:26","slug":"new-child-care-tax-credits-202","status":"publish","type":"post","link":"https:\/\/www.care.com\/benefits\/new-child-care-tax-credits-202\/","title":{"rendered":"New child care tax credits:\u00a0What employers need to know"},"content":{"rendered":"<p>Big changes are here for child care tax credits, and they don&rsquo;t just impact families. They open meaningful opportunities for employers, too.<\/p><p>The 2025 federal tax package expands several child care-related tax programs. The result? <strong>More ways for organizations to support working parents, while earning up to 50% back in tax credits.<\/strong><\/p><p>Care.com&rsquo;s policy and government affairs team poured passion and persistence into advancing meaningful change in the federal tax package. Now, we&rsquo;re helping employers understand how to turn these changes into action.<\/p><figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.care.com\/benefits\/wp-content\/uploads\/sites\/8\/2025\/08\/Bryan-Jamele-quote-1024x683.png\" alt=\"\" class=\"wp-image-10402\"><\/figure><p><\/p><h2 class=\"wp-block-heading\" id=\"h-what-s-changing-and-why-it-matters-for-your-company\"><strong>What&rsquo;s changing and why it matters for your company<\/strong><\/h2><p>The following changes take effect for expenses paid or incurred after December 2025, and they open new doors for employer-sponsored child care benefits.<\/p><h3 class=\"wp-block-heading\" id=\"h-employer-provided-child-care-credit-section-45f\">Employer-Provided Child Care Credit (Section 45F)<\/h3><ul class=\"wp-block-list\"><li>Credit rate increased from 25% to <strong>40%<\/strong> of qualified child care expenditures (50% for eligible small businesses)&nbsp;<\/li><li>Annual credit cap raised from $150,000 to <strong>$500,000 <\/strong>($600,000 for eligible small businesses)<ul class=\"wp-block-list\"><li>Both the $500,000 and $600,000 annual credit caps will be adjusted for inflation starting in 2026, ensuring the benefit grows over time<\/li><\/ul><\/li><li>Employers can now partner with outside experts, like Care for Business, to deliver qualified child care benefits without managing them in-house.<sup>1 <\/sup>Examples include:<ul class=\"wp-block-list\"><li>Providing <a href=\"https:\/\/www.care.com\/benefits\/backup-care\/\">Backup Care<\/a> services through our network of child care centers<\/li><li>Providing access to background-checked caregivers through a <a href=\"https:\/\/www.care.com\/benefits\/care-membership\/\">Care.com Membership<\/a><\/li><li>Providing individualized expert assistance in finding care using our <a href=\"https:\/\/www.care.com\/benefits\/care-specialists\/\">Care Specialists<\/a><\/li><li>Designing and managing onsite or nearsite child care centers through our <a href=\"https:\/\/www.care.com\/benefits\/additional-products\/\">Care Center Solutions<\/a>&nbsp;<\/li><\/ul><\/li><\/ul><h3 class=\"wp-block-heading\" id=\"h-dependent-care-assistance-plans-dcaps\">Dependent Care Assistance Plans (DCAPs)<\/h3><ul class=\"wp-block-list\"><li>Employees can now set aside up to <strong>$7,500 tax-free<\/strong> (up from $5,000) to help cover care costs<\/li><\/ul><p>The new tax package also includes changes to the Child and Dependent Care Tax Credit (CDCTC) and Child Tax Credit (CTC), which primarily benefit families directly and don&rsquo;t require action from your organization.<\/p><h2 class=\"wp-block-heading\" id=\"h-what-this-could-mean-for-your-business\"><strong>What this could mean for your business<\/strong><\/h2><p><strong>Meaningful tax savings<\/strong><\/p><p>These changes offer a powerful offset to care-related costs you may already be incurring. They also present a compelling reason to invest in high&#8209;impact child care benefits with less financial risk.<\/p><p><strong>Flexible, scalable options<\/strong><\/p><p>Use the credits in ways that work for your business: whether that&rsquo;s building or expanding an onsite center, subsidizing care through licensed providers, or offering tuition discounts. Care for Business can help you explore all of these options through our white-glove, consultative service, <a href=\"https:\/\/www.care.com\/benefits\/additional-products\/\">Care Center Solutions<\/a>.&nbsp;<\/p><p><strong>Flexible ways to support the parents in your workforce<\/strong><\/p><p>Care benefits are no longer &ldquo;nice to have.&rdquo; They&rsquo;re a strategic differentiator. When you support working parents, it signals that your company sees the whole person, not just the job title.&nbsp;<\/p><p>Employees with caregiving benefits <a href=\"https:\/\/www.care.com\/benefits\/reports\/2025-future-of-benefits-report\/\">report<\/a> higher productivity (45%) and lower absenteeism (40%). These are clear indicators that the right support not only helps families thrive, but also strengthens your workforce.<\/p><h2 class=\"wp-block-heading\" id=\"h-how-care-for-business-can-help\"><strong>How Care for Business can help<\/strong><\/h2><p>We&rsquo;ve been at the forefront of child care policy for years, and now that real change is here, we&rsquo;re ready to help you turn it into real impact.<\/p><p>Whether you&rsquo;re considering subsidized care, building an onsite daycare center, or simply exploring your options, we&rsquo;ll help you:<\/p><ul class=\"wp-block-list\"><li>Design a benefits strategy aligned with your goals<\/li><li>Connect with trusted care providers<\/li><li>Support your employees with care they can count on<\/li><\/ul><h2 class=\"wp-block-heading\" id=\"h-start-the-conversation-now\"><strong>Start the conversation now<\/strong><\/h2><p>Care for Business can help you explore benefit strategies that support your team and make the most of the new opportunities.&nbsp;<\/p><p>And, as part of our partnership, we can track, document, and report eligible child care expenditures to support your tax filing, so that you can take full advantage of this newly expanded tax credit.&nbsp;<\/p><p><a href=\"https:\/\/www.care.com\/benefits\/contact-us\/\">Get in touch with us here.<\/a><\/p><p><em>IMPORTANT NOTE: We don&rsquo;t offer tax advice, so we recommend speaking with your tax advisor to understand which credits your organization may be eligible for.&nbsp;<\/em><\/p><ol class=\"wp-block-list\"><li><em>The tax credit for &ldquo;Resource and Referral services&rdquo; is 10%<\/em><\/li><\/ol>","protected":false},"excerpt":{"rendered":"<p>Big changes are here for child care tax credits, and they don\u2019t just impact families. They open meaningful opportunities for employers, too. The 2025 federal tax package expands several child care-related tax programs. The result? More ways for organizations to support working parents, while earning up to 50% back in tax credits. Care.com&#8217;s policy and <a class=\"more-link\" href=\"https:\/\/www.care.com\/benefits\/new-child-care-tax-credits-202\/\">Read more&#8230;<\/a><\/p>\n","protected":false},"author":1481,"featured_media":10404,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"enable_toc":false,"care_reviewed_by":0,"care_post_updated_flag":true,"care_updated_date":"2025-08-12 00:00:00","last_update":"2025-08-12","content-type":"","footnotes":""},"categories":[1],"tags":[31,3,4],"member-type":[],"vertical":[],"platform":[],"class_list":["post-10401","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-child-care","tag-employee-benefits","tag-working-parents"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.3 (Yoast SEO v25.8) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>New child care tax credits:\u00a0What 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