Download a PDF of the memo HERE

To: Interested Parties

Re: The Big Ugly Bill is Devastating for our Child Care System, Workers, Families and Kids

Date: August 4, 2025

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Congressional Republicans that voted for the “Big Ugly Bill” are trying to paper over their cruel and devastating cuts to health care and food assistance by claiming the bill makes progress on child care. Don’t buy their spin. This bill does far more harm than good for families struggling to afford child care. 

Families Will Pay More for Everyday Expenses

The Big Ugly Bill rips health care away from 15 million Americansincluyendo 10 million people that rely on Medicaid. It also made the largest cut to SNAP ever, impacting benefits for more than 40 million people, including 16 million children. 

The cuts to basic needs programs made in this bill far exceed the minor changes made to child care provisions. For example, the average family with children that receives the Child and Dependent Care Tax Credit could see their credit increase by about $265, but may also see their ACA health care premiums spike by 75 percent. That’s still less money in their bank account at the end of the month. Giving someone a penny while taking a dollar (or hundreds of dollars) away from them isn’t progress. 

The Child Care “Benefits” Barely Scratch the Surface–And Exclude Millions of Families

The Big Ugly Bill modestly increased the contribution limits for Dependent Care Assistance Programs (DCAPs). These are workplace benefits that provide tax savings for employees who can afford to put money aside out of their paychecks for child care expenses. Even the expanded accounts still would not come close to covering the high cost of child care. As reported in USA Today, for a married mom of two in San Antonio who pays about $34,000 per year for child care, the $7,500 of her own income that she can now put into a DCAP at work  would not scratch the surface of her costs. As she put it, “the full cost of my child care is, like, more than three times that…” And to be clear, families have to contribute the $7,500 out of their own paychecks. The only benefit they get is not having to pay taxes on that amount. 

The bill also slightly increased the Child and Dependent Care Tax Credit. Because the credit is not refundable, almost no one receives the maximum credit amount. A recent analysis found that in 2026, when the law goes into effect, families with children who receive the CDCTC will get an average benefit of $890, even though the credit is theoretically worth a maximum of $3,000. In comparison, in 2023, the average benefit amount was $625. Families with lower incomes get little or no benefit from the credit now, or the expansion. What’s more, the increase in the amount families can contribute to DCAPs offsets how much a family can claim for the tax credit – so families effectively cannot benefit from both. It is a shell game, and the bottom line is that the families who need the most help paying for child care will continue to receive no benefit at all from these tax provisions.

The other child care provision in the Big Ugly Bill, the employer-provided child care tax credit (45F), has not been widely used by businesses over the past 20 years, and has not been shown to increase the supply of child care. Not to mention that employees have serious concerns about using employer-provided child care: namely that if they lose their job, they also lose child care. And employers who have offered child care have often stopped or taken away those benefits when leadership or their financial status changes. The Big Ugly Bill did not solve any of these issues with this tax credit.

Most notably, these tax provisions do nothing to increase the availability of child care or make it more accessible for families. Child care deserts continue to plague communities across the country, and without meaningful investments in supply, some parents may receive a nominal credit but remain limited in where they can use it.

The Big Ugly Bill Hurts Already-Struggling Child Care Workforce

The child care system is already fragile and was made worse by the pandemic. The system heavily relies on early educators and care workers, the majority of whom are Black, brown, and immigrant women barely making enough to support their own families. 

Nearly 28 percent of early educators are covered by Medicaid, which is higher than the national average. Forty-three percent of early educator families rely on one or more public safety nets such as Medicaid or SNAP to make ends meet. The massive cuts to these programs included in the Big Ugly Bill will push them further into poverty, leading to a more severe workforce shortage as providers seek jobs with higher compensation and benefits. The law also increases funding for immigration enforcement activities, which will put immigrant early educators, who make up 20 percent of the sector’s workforce, at risk.

For years, early educators have been forced to leave a job they love for higher wages elsewhere. This bill will put an even greater strain on the child care system by forcing workers to find higher-paying jobs if they can no longer afford health care or are deported by the administration’s cruel deportation policies. 

The Big Ugly Bill Was Passed Amid Continuous Trump Administration Attacks on Child Care and Head Start

The Trump Administration has relentlessly attacked child care and Head Start via executive actions, and Congressional Republicans have done very little to push back. To date, the Administration has withheld child care and Head Start dollars, sought to bar immigrant children from Head Start, and proposed eliminating federal programs like the Child Care Means Parents in School (CCAMPIS) program and Preschool Development Grants (PDG). 

Conclusion

The help that the child care tax policies in the reconciliation bill will provide to working families has been wildly overblown. We can’t tax credit our way out of the child care crisis–certainly not with these provisions. And examining the impacts of this bill cannot be done piecemeal. The bill must be considered in its entirety, taking into account the overall impact it will have on working families and the actions of the Administration that championed it. Regardless of what its supporters may claim, this bill will leave working families with less money in their pocket for everyday expenses and further strain the entire child care system. 

In order to meaningfully address the child care crisis, we need bold action that treats child care as the essential public good that it is, not a luxury for the few. That includes making major investments to make child care more affordable, particularly for low-income families;  dramatically increasing the amount of child care supply available so families have options within their community; and finally paying child care workers wages that reflect the crucial work that they do. The Big Ugly Bill does none of that. 

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The memo was signed by: 

All Our Kin

Campaign for a Family Friendly Economy 

Caring Across Generations

Center for American Progress

Center for Law and Social Policy (CLASP)

The Child Care for Every Family Network (La Red)

Coalition on Human Needs

Community Change Action

Family Values @ Work

Institute for Women’s Policy Research

MomsRising

Mother Forward

National Women’s Law Center Action Fund

Service Employees International Union (SEIU)

United Parent Leaders Action Network (UPLAN)

Alabama Institute for Social Justice

Alliance for Quality Education

BANANAS, Inc.

California Child Care Resource & Referral Network

Child Care Law Center

Family Forward Oregon

Institute for Child Success

ISAIAH

Maine People’s Alliance

Marin Child Care Council 

Marin County Child Care Commission 

NJ Communities United

Parent Voices, California

Parent Voices Oakland

Partnership for Children & Youth

The Children’s Agenda

Virginia Organizing