Tuesday is the deadline for Americans to file their federal income tax returns, and while the tax code includes numerous provisions to help families offset higher education costs, very few incentives exist to offset early childhood expenses.
Changing this dynamic is crucial, not just for the wellbeing of today’s children, but for the economic health of our country.
Access to affordable, reliable, and quality early learning and care is an economic necessity for working families. Quality child care provides families with better job stability and overall economic security, making it less likely that families will need additional public assistance. The first five years of a child’s life are particularly crucial to their overall development, these years lay the foundation for growth, development, and school readiness.
Less than half of low-income children have access to high-quality early learning and care programs that could dramatically improve their opportunities for a better future. Expanding availability and options for parents to access high-quality early childhood programs now, results in reduced costs to society later.
As Congress considers comprehensive tax reforms, the First Five Years Fund believes that there is a significant opportunity to expand access to early childhood education by enhancing existing tax credits and deductions for families, and by adding new and innovative strategies to encourage investment in high-quality programs—such as by making the Child and Dependent Care Tax Credit (CDCTC) fundable for children under the age of five, enhancing the American Opportunity Tax Credit (AOTC) so it can be applied towards quality early childhood programs, expanding the definition of “qualified institutions” for tax-free scholarships, and increasing limits on the Dependent Care Assistance Program (DCAP) to incentive employers to contribute more to employee accounts.