Child and Dependent Care Tax Credit Enhancement Act of 2025

HR 2994, the Child and Dependent Care Tax Credit Enhancement Act of 2025, increases financial support for families covering childcare costs. It raises the credit rate to 50% (reduced for higher incomes), boosts the maximum creditable amount from $3,000 to $8,000 per child under 13 (or $6,000 to $16,000 for other dependents), and adjusts these limits annually for inflation starting in 2026. The bill also ensures married couples filing separately calculate their credit as if filing jointly, preventing reduced benefits. It directly affects low- and middle-income taxpayers with childcare expenses who itemize deductions. The changes take effect for tax years beginning after December 31, 2024.