What Is the Value of the Child and Dependent Care Credit?

Gabrielle Pepin

AEA Papers and Proceedings, 2025, vol. 115, 120-25

Abstract: The Child and Dependent Care Credit (CDCC) subsidizes child care costs for working families. In response to the COVID-19 pandemic, the American Rescue Plan Act of 2021 increased the CDCC's generosity during 2021 only. I find that while the CDCC is of relatively little value in its current form, increases in eligibility rates and conditional benefits under the pandemic expansion increased the credit's value dramatically. Conditional on CDCC eligibility, higher-income households experienced the largest increases in benefit levels under the expanded CDCC, but lower-income households benefited disproportionately when measuring benefits as a share of income or child care spending.

JEL-codes: D31 H24 I38 J12 J13 J31 (search for similar items in EconPapers)
Date: 2025
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Related works:
Working Paper: What Is the Value of the Child and Dependent Care Credit? (2024)
Working Paper: What Is the Value of the Child and Dependent Care Credit? (2024)
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DOI: 10.1257/pandp.20251101

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