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Louis Jacobson
By Louis Jacobson December 21, 2017

Tax bill doesn't increase deductions for dependent care expenses

As a presidential candidate, Donald Trump pledged to provide relief to parents strapped by child care expenses.

"The Trump plan will rewrite the tax code to allow working parents to deduct from their income taxes child care expenses for up to four children and elderly dependents," the campaign said in its child care proposal.

On Dec. 19 and 20, the Senate and the House passed the final version of the tax bill, which will go to the president for his signature.

So how does the tax bill address this pledge? It doesn't -- at least not directly.

The bill passed by Congress did not significantly overhaul existing child care provisions in the tax code. Instead, it increased the per-child credit.

Under the bill, families will get additional child tax credits, and a portion will be refundable for households that do not earn enough to pay taxes. The tax credit for each child under 17 will double from $1,000 to $2,000, plus $500 for non-child dependents. The credit also applies to more affluent families than previously, phasing out at $400,000 rather than the current $110,000 for joint filers. These provisions will sunset after 2025.

However, this is an imperfect tool for addressing child care costs -- the point of Trump's promise.

For one thing, the new child credits will be partially offset by another provision of the new bill -- the disappearance of the personal and dependent exemption. More importantly, the child credit isn't targeted towards parents who need to pay for child care -- many parents who benefit from the credit may have no child care expenses at all.

The changes in the tax bill aren't what Trump had promised. We rate this a Promise Broken.

Our Sources

PolitiFact, "What's in the final version of the tax bill?" Dec. 18, 2017

PolitiFact, "Who wins and who loses from the tax bill?" Dec. 19, 2017

Joint Committee on Taxation, "Distributional Effects Of The Conference Agreement For H.R.1, The Tax Cuts And Jobs Act," Dec. 18, 2017

Urban Institute-Brookings Institution Tax Policy Center, "Analysis of the Tax Cuts and Jobs Act," accessed Dec. 20, 2017

Email interview with Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, Dec. 19, 2017

Interview with Joseph Rosenberg, senior research associate at the Urban Institute-Brookings Institution Tax Policy Center, Dec. 21, 2017

By Allison Colburn October 5, 2017

Trump’s child care promise takes new approach in tax framework

As part of a plan to help families afford child care expenses, President Donald Trump campaigned on expanding assistance for parents paying for the care of others in their household.

"For many families in our country, child care is now the single largest expense — even more than housing," Trump said at a September 2016 campaign speech in Aston, Pa. "Yet, very little meaningful policy work has been done in this area ...There is no financial security."

One portion of Trump's Child Care Plan proposed allowing working parents to deduct from their taxes child care expenses for up to four children and elderly dependents. The deduction would not extend beyond the "average cost of care" for the parent's state of residence and would not apply to a person making more than $250,000 per year. The plan also suggested offering child care spending rebates through the Earned Income Tax Credit, which is a benefit for low- to moderate-income earners.

The framework for the Trump administration's proposed tax legislation, released on Sept. 27, takes a different approach.

Instead of basing deductions and tax credits on child care costs, the framework proposes increasing the Child Tax Credit from the current amount of $1,000 and raising the current income threshold for which the credit phases out. The plan does not specify how much the credit would increase or which incomes level would qualify.

The framework also creates a new $500 credit for non-child dependents such as the elderly or disabled.

Those expanded credits could certainly help taxpayers afford their child care costs, but no part of the framework bases deductions or credits on child care expenses, as Trump had initially proposed. Furthermore, the framework does not include any changes to the Earned Income Tax Credit.

Trump's initial plan to help parents offset the cost of child care based on expenses incurred hasn't made its way into the current tax policy plan. But the framework at least expands the Child Tax Credit and includes a new credit aimed at helping people afford caring for dependents. Since at least some action has been taken on this promise, for now we'll rate it In the Works.

Our Sources

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