Child Care Centers NAICS 624410

Jul 9, 2025 - Big Beautiful Bill Increases Federal Funding For Child Care

• The One Big Beautiful Bill signed into law by President Trump includes large cuts to health insurance, food stamps, and clean energy programs but significantly increases federal funding for child care, according to Vox. Lawmakers plan to allocate $16 billion into three federal tax credit programs that haven’t been permanently updated in decades. Lawmakers raised the cap on Dependent Care Flexible Spending Accounts for the first time since 1986, from $5,000 to $7,500. These employer-sponsored accounts let families pay for eligible expenses like day care, preschool, and summer camp using pre-tax dollars. They also permanently expanded the tax credit for working parents, known as the Child and Dependent Care Tax Credit for the first time since 2001. The typical benefit for a dual-earner, middle-income family with two kids will increase from $1,200 to $2,100. The tax credit for businesses that help employees find or provide care — with extra incentives for small employers — was tripled. This was also last updated in 2001. The Child Tax Credit (which can be used for a broader array of household expenses beyond child care) was modestly increased by raising the maximum refundable portion from only $1,600 to $1,800 per child.
• The cost of child care now exceeds the price of college tuition in 38 states and the District of Columbia, up from 33 states and DC since the beginning of the coronavirus pandemic, according to the Economic Policy Institute (EPI). EPI used 2023 federal and nonprofit data to compare the monthly cost of infant child care to that of tuition at public colleges. Average costs range from $521 per month in Mississippi to as much as $1,893 per month in Washington, DC, for households with one 4-year-old child, according to EPI.

• Child care facility owners contacted by the Federal Reserve Bank of Kansas City noted increasing liability insurance premiums as an emerging challenge for their business. One provider said that their premiums increased 94% in 2023. Another suggested that a growing informal child care network is operating without insurance due to the rising costs. Increasing operating costs, particularly rent and insurance, result in higher tuition costs for families in the absence of additional public funds, but there are limits to tuition increases, according to the National Association for the Education of Young Children.
• Child care industry employment increased slightly and average wages for nonsupervisory employees decreased slightly during the first five months of 2025, according to the US Bureau of Labor Statistics. Child care industry revenue increased 2.3% year over year and 1.7% quarter over quarter during the fourth quarter of 2024, according to the US Census Bureau. Child care center sales are forecast to grow at a 4.89% compounded annual rate from 2025 to 2029, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.