The One Big Beautiful Bill Act, enacted on July 4, 2025 as Public Law 119-21, introduced a wide range of changes that will impact tax returns for the 2025 tax year and beyond.
While the credit for child and dependent care expenses remains nonrefundable and is calculated using the smaller of (a) qualifying expenses, (b) the primary taxpayer's earned income, or (c) the spouse's earned income, the OBBB increased the decimal amount used to calculate the credit based on the return's AGI.
Beginning in tax year 2026, the maximum decimal amount will increase from 0.35 to 0.50:
| AGI Over... | but not over | 2025 and earlier | 2026 |
| $0 | $15,000 | 35% | 50% |
| $15,000 | $17,000 | 34% | 49% |
| $17,000 | $19,000 | 33% | 48% |
| ... | ... | ... | ... |
| $41,000 | $43,000 | 20% | 35% |
| ... | ... | ... | ... |
| $75,000 / $150,000 | $77,000 / $152,000 | 20% | 34% |
| $77,000 / $152,000 | $79,000 / $154,000 | 20% | 33% |
| $79,000 / $154,000 | $81,000 / $156,000 | 20% | 32% |
| ... | ... | ... | ... |
| $103,000 / $178,000 | no limit | 20% | 20% |
(This table represents a subset of the possible AGI options.)
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