The LITTLE Act creates two new tax benefits to help families afford childcare. First, it establishes a startup credit allowing individuals who provide childcare services to claim 30 percent of their startup expenses, up to a lifetime limit of $10,000, provided they care for at least two children and comply with state and local requirements. Second, it significantly expands and makes refundable the dependent care credit—increasing it to cover up to $7,500 in expenses for one child or $15,000 for two or more children, with the credit percentage set at 50 percent for lower-income families and gradually declining to 35 percent for higher-income families. The bill repeals the previous childcare credit (Section 21) and replaces it with this new enhanced version, which will automatically adjust for inflation after 2024. Both provisions take effect immediately upon enactment for eligible taxpayers.
Take Action
Your position
Add a comment
to comment on this bill.
Annotate the text
Highlight any passage on the Summary or Full Text tab to attach a note. Annotations appear on the Annotations tab.