Tax Season Brings New & Enhanced Benefits for America’s Children

Rising Costs, Real Relief: Why These Tax Changes Matter for Families Now

Across the country, hardworking families are doing everything they can to give their children a strong start in life. Yet, the rising costs for child care, housing and everyday essentials makes that harder each year. In last summer’s One Big Beautiful Bill – also known as the 2025 Reconciliation Bill – Congress took an important step: it strengthened family-focused tax provisions based on broad, bipartisan agreement that supporting children and hardworking families is not a partisan issue, but a shared responsibility. These provisions reflect the simple truth that when families can work and children have safe, stable places to learn and grow, communities and the economy are stronger.

Now, as families prepare to file their taxes, these new and strengthened benefits are available for the first time. They have the potential to ease financial strain, help parents stay in the workforce and open new opportunities for children’s futures. But to make the most of them, families must know what’s available this tax season, and how to access it.

These reforms arrive at a time of real need. The child care crisis continues to take a heavy toll on families and local economies. In many states, the cost of child care for two children rivals or exceeds college tuition, rent or even a mortgage. In rural America, where Save the Children partners with families every day, the challenge is often a lack of any child care providers at all. Parents travel long distances, rely on unstable care arrangements or make heartbreaking decisions to leave jobs they need. Children miss out on early learning experiences that shape their futures. This isn’t sustainable for families, rural communities or our country’s economy.

The child-centered tax measures in the reconciliation bill offer real help.

Stronger Child Tax Credit to Help Families Afford Essentials

One of the most significant changes is the permanent increase of the Child Tax Credit (CTC) to $2,200 per child, indexed for inflation. For families juggling the costs of food, clothing, transportation, rent and school needs, the CTC is a lifeline. It gives parents the flexibility to meet their children’s most pressing needs, which is why it has long been one of the most effective and widely supported tools for reducing child poverty. The strength of the CTC is not just its size but its flexibility, recognizing that families’ needs, especially in rural and low-income communities, rarely fit into a single category.

A More Robust Child and Dependent Care Tax Credit

The Child and Dependent Care Tax Credit (CDCTC) has also been expanded, making it far more responsive to the true cost of child care today. For years, the credit covered only a small fraction of what families actually pay. Now, more families qualify for a larger benefit, which can make the difference between maintaining a job or leaving the workforce. In communities where child care options are limited and commutes are long, this kind of support can determine whether parents are able to stay employed at all.

Employer-Provided Child Care Tax Credits (45F): Helping Employers Support Working Parents

Another encouraging change is the expansion of 45F, which provides tax incentives to employers that help their employees access child care. This approach recognizes child care is not just a family issue; it’s a workforce issue. When businesses can support their employees’ child care needs, parents are more likely to stay in their jobs, businesses experience less turnover and communities thrive. For rural and small-town employers, where the loss of even one employee can strain an entire operation, this support matters.

Dependent Care Assistance Programs (DCAP): Expanded Tax Savings for Families

The One Big Beautiful Bill also made an important, practical improvement to Dependent Care Assistance Programs (DCAP), a tool many working families already rely on to make child care more affordable. DCAPs allow parents to set aside pre-tax earnings through an employer-sponsored account to pay for child care, stretching family budgets further by reducing taxable income. The bill increased the annual contribution limit from $5,000 to $7,500 – a modest change on paper, but one that can translate into meaningful savings over the course of a year.

By lowering out-of-pocket expenses and making it easier for parents to stay in the workforce, stronger DCAPs complement the expanded CDCTC and reinforce a broader commitment to working families. It’s a win for families, employers and local economies alike.

Trump Accounts: A Head Start on Financial Security

The bill also created Children’s Investment Accounts – sometimes called 530A Accounts or “Trump Accounts” – a temporary pilot program that provides an opportunity for every child born in the United States between 2025 and 2028 a one-time $1,000 deposit to start building savings. For many children, especially those in low-income or rural communities, this will be a real first step towards financial stability.

Research shows that even modest savings in a child’s name can make a meaningful difference. Children with savings are more likely to graduate high school, pursue higher education or training and enter adulthood with greater confidence and stability. And for teenagers, having a small financial foundation can open doors – to extracurricular activities, educational materials, career training or a first big opportunity.

The challenge is that signup for this program is temporary. Temporary programs can help in the short term, but children’s needs do not expire. And, at Save the Children, we believe strongly that every child deserves this chance. To make a compelling case for making these accounts permanent, families must take advantage of them now. Early and widespread participation, particularly among vulnerable populations, will show policymakers that this investment is making a difference, and Congress should treat that success as a mandate to make them last.

Looking ahead: A Tax Season That Can Shape the Future

As Americans file their taxes in early 2026, participation in the expanded and enhanced CTC, CDCTC, DCAP, 45F and the new Children’s Investment Accounts will offer an early proof of concept that tax provisions for hardworking families can ease financial burdens and create new opportunities for children and their families, particularly in rural America. This tax season offers a clear opportunity to recognize that investing in kids, and in the families, employers and communities that support them, is not only compassionate but smart, durable policy for America’s future. Making sure families understand and can access these tax provisions is the next step to ensure they deliver on that promise.