# The LITTLE Act of 2024: Making Childcare More Affordable

This bill creates two new tax breaks aimed at making childcare more affordable for working families and helping people start childcare businesses.

## A Tax Credit for Starting a Childcare Business

The first part of the bill offers a tax credit to people who want to start their own childcare business. If you're starting a childcare service and caring for at least two children, you can claim a credit worth 30 percent of your startup costs—things like equipment, training, licensing fees, and initial supplies. However, there's a cap: you can't claim more than $10,000 total across all years. This is designed to help lower the barrier for people who want to enter the childcare business but don't have much money upfront.

## A Bigger, Refundable Tax Credit for Childcare Expenses

The second and larger part of the bill significantly expands the existing childcare tax credit for working parents. Currently, families can claim a credit covering up to 20-35 percent of their childcare costs, but the bill increases this to 35-50 percent depending on income. More importantly, the bill makes this credit "refundable," which means if the credit is larger than the taxes you owe, the government sends you the difference as a refund—essentially free money to help pay for childcare.

The bill also raises the dollar limits on how much childcare spending qualifies for the credit: from $3,000 to $7,500 for one child, and from $6,000 to $15,000 for two or more children. These limits will automatically increase each year to keep up with inflation. The credit gradually phases down as your income rises above $15,000, but it never drops below 35 percent. This means even middle-income families get meaningful help with childcare costs, and lower-income families get the most assistance.