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Bill

HR 8023

To amend the Internal Revenue Code of 1986 to provide a credit for increasing wages paid to child care providers.

119th Congress Introduced by Carol Miller and 2 co-sponsors

Creates a nonrefundable tax credit for employers to raise average wages of qualified child care workers, with a 5% (7% rural) credit and wage- increase requirement.

Introduced in House
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WeVote Research Nonpartisan
Bill Summary · HR 8023

Overview

  • Bill: HR 8023
  • Session: 119th Congress
  • Purpose: Amend the Internal Revenue Code to create a new tax credit aimed at increasing wages paid to child care providers.
  • Introduced by: Rep. Sanchez (with Rep. Miller of WV) on March 19, 2026
  • Status: Referred to the House Committee on Ways and Means

Main purpose and intent

  • The bill establishes a new nonrefundable tax credit, the "Child Care Supply Credit," intended to incentivize employers of child care workers to raise wages.
  • The credit is designed to reward employers who increase average hourly wages for qualified child care workers from one tax year to the next.

Key provisions and changes

  • New credit: Sec. 45BB (Child Care Supply Credit)
    • Purpose: Credit against the employer’s income tax (as part of the general business credit under Sec. 38).
    • Calculation (for a taxable year):
    • The credit equals the lesser of: 1) An applicable percentage of qualified child care wages paid or incurred during the year, or 2) The excess of qualified child care wages paid in the current year over the preceding year.
    • Applicable percentage:
    • Generally 5%
    • 7% for wages paid or incurred at an eligible child care facility located in a rural area
    • Definition of terms:
    • Qualified child care wages: Wages paid to qualified child care workers (as defined).
    • Qualified child care wages exclude amounts already used for other credits under the subpart.
    • Qualified child care worker: Employee at an eligible child care facility who provides child care services.
    • Eligible child care facility: A facility that serves at least 6 individuals, receives a fee/grant/payment for services, and complies with applicable state/local laws.
    • Child care services: Care, education, protection, supervision, or guidance provided to children.
    • Requirement of wage increase:
    • No credit is allowed unless the employer’s average hourly child care wage for the tax year exceeds the average hourly wage for the preceding year.
    • Average hourly wage is calculated as total qualified wages paid or incurred divided by the total hours of service for which those wages were paid or incurred.
    • Elective treatment:
    • Taxpayers may elect to have the credit not apply for a taxable year, with rules similar to those in Sec. 51(j) (related to election limitations and specifications).
  • Interaction with other credits and tax provisions:
    • The credit is treated as part of the general business credit (Sec. 38(b)) by adding a new paragraph (42) to reflect the child care supply credit.
    • Elective payments: The credit is also incorporable into the elective payment framework (Sec. 6417(b)) as an allowed credit.
    • Denial of double benefit: The code is amended to disallow double benefits by including 45BB(a) among the credits referenced in Sec. 280C(a).
  • Administrative and clerical changes:
    • The bill adds Sec. 45BB to the table of sections for Subpart D, Part IV, Subchapter A, Chapter 1 of the Internal Revenue Code.
  • Effective date:
    • The amendments apply to taxable years beginning after the date of enactment.

Who and what is affected

  • Affected taxpayers: Employers of qualified child care workers who operate eligible child care facilities.
  • Eligible facilities: Child care providers serving at least 6 children, receiving fees/grants/payments, and compliant with state/local laws.
  • Beneficiaries: Child care workers (via higher wages funded by increased credits to their employers) and the broader child care supply by encouraging wage increases.
  • No direct impact on individual taxpayers beyond how employers may claim the credit as part of the general business credit.

Procedural and timeline notes

  • Process: Introduced in House and referred to the Committee on Ways and Means.
  • Effective date: Applies to taxable years beginning after enactment.
  • Election mechanics: Taxpayers can opt out of the credit for any taxable year, with applicable rules mirroring other credits’ election provisions (as per Sec. 51(j)).

Potential impact (summary)

  • Economic impact: By encouraging higher wages for child care workers, the bill aims to improve compensation in the sector, potentially aiding recruitment and retention.
  • Access and quality: Higher pay could influence the availability and quality of child care, particularly if wage increases translate into better staffing and outcomes.
  • Geographic considerations: Rural areas may see a higher credit rate (7%), providing a stronger incentive in those regions.

Compiled from official sources — confirm details with the bill’s official record.

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