Child care is one of the hottest topics in public discourse today, and for good reason. The sector is finally (if a bit slowly) getting the attention it deserves, and several universal truths have emerged:

1. Child care is a bipartisan issue. Although specific strategies and priorities may differ from right to left, all of society benefits from well-funded and well-functioning early care and education systems.
2. The ROI for early childhood investment is staggering. From a purely economic standpoint, few investments pay off as strongly or as consistently as early childhood. The National Forum on Early Childhood Policy and Programs estimates returns between $4 and $9 per every $1 invested in high-quality early childhood programs.
3. Child care is ripe for modernization. We're not going to see sustainable gains by pouring more money into the old way of doing things. Better data and technology infrastructure will reduce barriers to entry, improve efficiencies, and give policymakers the data they need to make informed decisions.

March 2025 Updates

Britt-Kaine Takes the Headlines

• Broadening the Child and Dependent Care Tax Credit (CDCTC) by raising maximum amounts to $2,500 for families with one child and $4,000 for families with two or more children. It will also make the credit refundable for low-and middle-income working families.
  
• Strengthening Dependent Care Assistance Plans (DCAP) by increasing pre-tax contribution limits for child care assistance plans from $5,000 to $7,500. The bill also ensures families can benefit from both DCAP and CDCTC when expenses exceed the DCAP threshold.
• Bolstering the Employer-Provided Child Care Tax Credit (45F) by increasing maximum credit to $500,000 from $150,000 and the percentage of covered expenses to 50% from 25%. Raises the incentive for small businesses and allows for joining applications from groups of small businesses.

Read: The First Five Things to Know About: The Britt-Kaine Bipartisan Child Care Plan (FFYF)

Alarm in Idaho as Legislators Pass Extreme Deregulation Bill Backed by Wonderschool

The push-pull of regulation and supply is an ongoing debate in ECE spaces. Nobody wants to live in a child care desert, but how much safety and quality are we willing to sacrifice in the name of accessibility? While there is no easy answer in the absence of increased funding, Idaho’s House Bill 243 took things a step too far for many ECE stakeholders with language that would have completely eliminated maximum child-to-staff ratios, giving full discretion to providers.

The bill, curiously backed by Wonderschool (editor’s note: Wonderschool is a BridgeCare competitor), would have been an unprecedented escalation of deregulation initiatives, opening the door for bad actors to take advantage of families’ desperate need for child care.

Fortunately, despite the House passing the bill as written, the Senate amended it to remove the most alarming language, resulting in a bill that relaxed ratios without eliminating them entirely. The revised bill is expected to pass a second vote in the House before making its way to the governor.

HB 243 should stand as a cautionary tale, raising questions about how a for-profit company with a vested interest in increasing child care supply even got such a dangerous piece of legislation to the table in the first place.

Read: Idaho Moves to Deregulate Child Care in First-of-Its-Kind Legislation (EdSurge)

New York Mayoral Candidates Signal Support for Universal Child Care

Could the city that never sleeps become the first major city in the United States to roll out a universal child care program? This utopian vision is slowly starting to become a possibility thanks to the efforts of a parent-led organization and growing interest from lawmakers at the local and state levels.

A five-year plan unveiled at a November event hosted by New Yorkers United for Child Care, would come with a price tag of $12.7 billion/year, or 6% of the state’s budget. The organization calls for the initiative to launch in the city and spread throughout the state, preferably funded by taxes on capital gains, corporations, and high-income earners. It aligns closely with Governor Kathy Hochul’s state of the state address earlier this year, in which she called for putting the state “on a pathway toward universal child care.” Several candidates in the 2025 mayoral election have embraced the plan, or parts of it, as a staple of their respective campaigns.

There is still much work to be done and the outcome of November’s election will play a significant role in whether the plan moves forward, but the mere possibility of universal child care at such a scale is worth monitoring.

Read: Could New York Become the First Major City to Offer Universal Child Care? (The 74)

Party Lines Blur on Refundable Child Tax Credits

We’ve been covering a large number of state- and federal tax credit proposals over the past few months, including Georgia’s recent passage of a $250 nonrefundable credit for children under the age of seven. Americans of all political persuasions have shown overwhelming support for ECE-focused tax reform. But one of the interesting developments in 2025 has been the newfound willingness of republican lawmakers to consider refundable tax credits.

As reported by Stateline, Indiana and Ohio are considering proposals for refundable tax credits of $1,000 and $500, respectively, either of which would “mark the first time a GOP-led state implemented a refundable child tax credit.” Refundable tax credits, which can be claimed by taxpayers with little to no tax liability, typically have a much larger impact on low-income families, many of whom do not make enough money to meet the tax thresholds necessary for nonrefundable credits.

All 11 states that currently offer refundable credits are led by Democratic governors and legislatures. We’ll be interested to see if this is the year when that precedent changes.

Read: Child tax credits, long a liberal priority, find favor in Republican states (Stateline)

Other Developments Throughout the Country

South Dakota Governor Larry Rhoden vetoed House Bill 1132, which would have increased the income threshold for the state’s child care assistance program for child care workers. The bill received bipartisan support in the House and Senate, but faced strong opposition from the state's Department of Social Services.

New Mexico’s Senate Bill 175 was signed into law. The bill amended the state’s Child Care Facility Revolving Loan Fund, and is backed by $10 million in this year’s budget to support loans for childcare facilities in areas of need.

Montana will eye a couple of bills (HB 456 and HB 457) aimed at expanding the state’s Bright Beginnings scholarship program by slashing income eligibility thresholds and ensuring child care workers automatically qualify for the program. The bills appear to have early bipartisan support.

Tennessee governor Bill Lee has voiced his support for expanding childcare licensing exemptions for various types of programs. The proposal would attempt to balance child safety with the state’s need for “tens of thousands of new daycare spots across rural and urban Tennessee.”

New Jersey governor Phil Murphy announced a cross-agency effort to align preschool and child care square footage requirements to a single standard. This effort would enhance the state’s mixed delivery preschool model by potentially enabling thousands of classrooms in child care centers to be used as state-funded preschools.

ICYMI: February 2025 Updates

Tri-Share Continues to Gain Momentum

The inextricable link between child care and workforce participation is forcing more employers to play a proactive role in making child care more accessible and affordable in their communities. In a rapidly growing number of states, that role now includes direct financial support in the form of a cost-sharing model that splits the cost of care between the state, employers, and employees.

Ohio’s House Bill 2 saw its first hearing in committee on February 4. The bill (and its companion in the Senate) would direct $10 million to a “Child CareCred Program,” which would largely model other successful implementations of the model from throughout the country.

Virginia referred a similar bill (HB 1771) to the Finance and Appropriations Committee in January, but it was quickly moved to a “passed by indefinitely” status, which likely means it will die in committee for the second year in a row.

First piloted in Michigan in 2021 under the name “Tri-Share,” the cost-sharing model has drawn the attention of at least nine other states in the years since, with five current implementations ranging from statewide to regional pilots and nearly the same number working their way through the legislative process right now. Michigan’s early success appears to be a strong indicator of the model’s viability at scale. Child Care Matters will be exploring Tri-Share in more detail in the weeks to come.

Read: Child care cost-sharing model brought back to the Ohio General Assembly (Ohio Capital Journal, 2/5/25)

Connecticut Governor Proposes a New Universal Preschool Endowment

On February 11, Governor Ned Lamont announced his intention to urge the Connecticut General Assemble to approve legislation to “implement the largest expansion of preschool access in Connecticut history.” The proposal (HB 6867), which had its first public hearing on February 19, calls for the state to deposit a portion of its anticipated surpluses over the next several years into a new fund called the “Universal Preschool Endowment.” The endowment would be seeded by $300 million from the FY25 surplus.

Per the governor’s office, the endowment would:

• Make preschool available at no cost to families earning up to $100,000 per year
  
• Limit the cost-share for families earning between $100,000 and $150,000 per year to a maximum of $20 per day
• Create 20,000 new preschool spaces by 2032
• Reduce the cost to families for approximately 19,000 existing preschool spaces
• Promote simple, easy to access, and flexible options to meet family needs

If enacted, the bill would open the door for Connecticut to join the growing list of states that have made early childhood education a priority with well-funded, well-managed universal preschool/universal pre-k initiatives.

Read: Governor Lamont Proposes the Largest Expansion of Preschool Access in Connecticut History (CT Office of the Governor, 2/11/25)

Kansas “Compromise” Bill Proposes Consolidation of Services Under New Office of Early Childhood

After a bi-partisan effort to centralize and streamline early childhood care services fizzled out in the Kansas Senate last year, Governor Laura Kelly has teamed with legislators from both sides of the aisle to move the proposal forward in 2025.

Calling it a “compromise agreement,” Governor Kelly has said the legislation “will increase government efficiency, transparency, and accountability while streamlining how we provide these critical services…”

Highlights of the proposal include:

• The formation of a new entity called the Office of Early Childhood to oversee nearly 20 existing state programs, including licensing, subsidy, Head Start, and more
• Streamlined licensing and regulatory guidelines and enforcement
• Elimination of the child care licensing fee for prospective providers
• The development of “clear career progression pathways for early educators”

The bill was introduced in both the House and the Senate in late January.

Read: Bipartisan Early Childhood Proposal Introduced in Kansas House and Senate (KS Office of the Governor, 1/31/25)

Australia Guarantees Three Days of Subsidized Child Care Starting in 2026

Although this blog has a strong United States slant to align with our readership, we are always keeping one eye on what’s happening internationally.

Australia made a huge pre-election splash this month, fast-tracking a bill that guarantees three days of subsidized care per child per week for eligible families.

The final version of the bill did not include a previously proposed “activity test” that required parents to be employed or participating in employment-adjacent activities to be eligible for the subsidy, a debate that should sound familiar to ECE advocates in the US.

This $300 million, four-year investment was the latest step in the Australian Government’s comprehensive roadmap to build a “universal early education and care system.” It's obviously hard to make any apples-to-apples comparison with the United States, but it is encouraging to see that when child care becomes a national priority, the potential exists for the system to undergo significant and meaningful change in a short period of time.

Good on ya, mates.

Read: 3-day guarantee - legislation passed (Australian Government Department of Education, 2/14/15)

Five More Developments Worth Keeping an Eye On

The start of US state legislative sessions is an eventful time for this blog. In the interest of brevity, we’ve summarized some of the more interesting February developments from around the country here:

Pennsylvania governor Josh Shapiro unveiled his 2025-26 budget proposal, which includes a number of significant investments in early care and education that will benefit both families and the workforce. Highlights include $55 million allocated to PA’s Child Care Works Program for recruitment and retention bonuses, $24.6 million to support Early Intervention, and $15 million for the Pre-K Counts program to raise educator wages and stabilize the workforce. Read more here.

The Georgia State Senate unanimously passed a bill to expand an existing state tax credit, launch a new one for children under the age of seven, and expand tax incentives for businesses that offer child care to their employees. Lieutenant Governor Burt Jones had named this bill a legislative priority for this session earlier in the month. Read more here.

Oregon is looking to align child care subsidy rates with increasing costs of living and care. HB 1350 and SB 5500 both aim to raise the reimbursement rates for the state’s Working Connections Child Care Subsidy, which had previously been tied to an outdated market rate model. Read more here.

South Carolina is leaning into the pro-work aspect of child care by incentivizing employers to support affordable and accessible care for their employees. The bi-partisan Senate Bill 47 saw its first hearing attended by members of the business and childcare community in early February. The bill would significantly increase tax credits for employers that operate a child care center or reimburse employee child care costs and those looking to establish new child care programs. It also creates a new refundable income tax credit for members of the child care workforce. Read more here.

The Small Business Child Care Investment Act would make a simple but meaningful change to small business loan accessibility for child care providers. The bill would enable nonprofit child care providers that meet small business eligibility requirements to participate in SBA loan programs that were previously not available to them. The bill advanced out of the Small Business and Entrepreneurship Committee in February. Read more here.