This bill reauthorizes the Child Care and Development Block Grant Act of 1990 and shifts delivery toward child care certificates as the primary mechanism for federal funding. It expands access for relative caregivers and broadens who can participate in the program, while embedding protections for working and newly married parents and creating a fraud-prevention pilot.
It also repeals the federal tax credit for household and dependent care expenses, pairing a major policy shift in public funding with changes to the tax code. The proposal increases federal funding to support the expanded framework and directs states to implement related oversight and reporting requirements.
At a Glance
What It Does
It authorizes funding for CCDBG at $14,000,000,000 annually for fiscal years 2026–2031 and requires direct services to be delivered through child care certificates, with limited carve-outs for in-home providers and relative caregivers.
Who It Affects
States administering CCDBG, parents of eligible children, relative caregivers (grandparents, aunts, uncles), and providers serving as relative or in-home care suppliers.
Why It Matters
Shifts to a certificate-based funding model increases parental choice and expands the caregiver pool, while introducing oversight and fraud-prevention measures. The moves toward broadening relative caregiving and protecting working and newly married parents represent a notable policy pivot in public child care delivery.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill reauthorizes the Child Care and Development Block Grant program and pivots delivery toward child care certificates as the preferred payment mechanism. States would issue certificates directly to parents who can use them to obtain care from a wider set of providers, including relative caregivers such as grandparents, aunts, and uncles.
The plan sets a minimum payment rate to relative caregivers and imposes safeguards to ensure care quality and program integrity. It also expands protections for religious providers, maintaining their autonomy and religious character while receiving CCDBG funds.
Key structural changes include a revised funding authorization, expanded definitions for who may act as a caregiver, and explicit notice and reporting requirements to help families understand certificate use. The bill adds a two-year fraud-prevention pilot with substantial funding to verify eligibility, prevent improper payments, and recover improper disbursements.
It also requires states to post coverage information online and to notify parents annually about how certificates can be used, including payments to relatives and disbursements to married parents when one parent acts as a relative caregiver.In parallel, the bill repeals the federal child and dependent care tax credit, aligning tax law with the new direct-support framework. It then imposes a set of conforming amendments to tax provisions that touch marital status rules and employment-related expenses, signaling a broad shift in how care-related subsidies and tax incentives interact with family work decisions.
The Five Things You Need to Know
The bill authorizes $14,000,000,000 in CCDBG funding for each fiscal year 2026–2031.
Direct services are delivered via child care certificates, with specific carve-outs for in-home providers and relative caregivers.
Relative caregivers (including grandparents and aunts/uncles) become eligible recipients under the CCDBG framework, with a defined payment rate not less than 75% of the family-child care rate.
A two-year, $50,000,000 fraud-prevention pilot will verify eligibility, prevent improper payments, and recover fraud.
The bill repeals the federal child and dependent care tax credit and makes related conforming changes to the tax code.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Funding and certificate-based delivery
Section 2 revises funding under the CCDBG program by raising the authorization to $14B per year for 2026–2031. It also restructures service delivery so that direct services are provided through child care certificates rather than grants or contracts with providers. The state plan must ensure that parent(s) can receive a certificate and that, where applicable, relative caregivers and in-home providers are treated in specific, limited ways to qualify for funds. This creates a uniform mechanism for payment and expands access channels beyond traditional provider grants.
Parental choice and provider eligibility
The amendments require states to offer parental choice via certificates and to limit the role of certain providers in delivering direct services. They also refine eligibility, specifying that in-home providers and relative caregivers are treated differently under the subchapter, with protections and exclusions designed to facilitate caregiver flexibility while preserving program integrity.
Quality of care and fund allocations
The bill restructures quality-of-care funding, reserving a maximum percentage for activities described in the act and dedicating a portion to infant and toddler quality initiatives. These changes aim to sustain program quality while expanding access through certificates.
Public information and notifications
The plan requires states to post coverage information on a state website and to annually notify eligible families about how certificates may be used, including eligibility for relatives as caregivers and the conditions for married parents acting as caregivers.
Nondiscrimination and religious protections
Religious providers receive explicit protections to operate under CCDBG funds without being forced to compromise religious autonomy. The provisions grant exemptions and a private right of action for violations, while maintaining national nondiscrimination standards.
Definitions and scope
Key definitions expand who qualifies as a relative caregiver and establish the term 'child care certificate' as the certificate-based payment instrument. The definitions also set boundaries for how relative caregivers and in-home providers participate in the program.
Fraud prevention and relative caregiving initiatives
The act introduces pilot programs to prevent fraud, verify eligibility, and increase the number of relative caregivers, paired with reporting requirements and targeted appropriations to support these pilots.
Repeal of tax credit for household and dependent care
Section 3 repeals the federal tax credit for household and dependent care expenses (section 21 of the Internal Revenue Code) and makes conforming amendments to related tax provisions, signaling a shift from an tax-credit approach to direct funding through CCDBG certificates.
This bill is one of many.
Codify tracks hundreds of bills on Social Services across all five countries.
Explore Social Services in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Parents of eligible children who want more flexibility in choosing care arrangements, including the option to use relative caregivers and the certainty of certificate-based funding.
- Grandparents, aunts, uncles, and other relatives acting as caregivers who can receive payment through certificates.
- Religious child care providers who benefit from explicit protections and exemptions while still receiving CCDBG funding.
- State lead agencies and local governments seeking to streamline delivery and reporting through a certificate-based model.
- Working and newly married parents who gain more stability and protections under the revised eligibility rules.
Who Bears the Cost
- Taxpayers funding the CCDBG expansion and the fraud-prevention pilots.
- State and local governments that must administer and report on certificate-based funding and new quality requirements.
- Individuals who previously benefited from the dependent care tax credit, due to repeal and shift to a certificate-based program.
- Child care providers subject to new reporting and compliance burdens to meet the certificate-based framework.
- Religious organizations that opt into CCDBG funding and must navigate nondiscrimination protections and exemptions.
Key Issues
The Core Tension
The central policy dilemma is whether to expand access and parental choice through a high-funding, certificate-based framework that prioritizes relative caregiving and religious protections, while adding fraud safeguards and altering the tax landscape, without compromising health, safety, and fair access across diverse family structures.
The bill shifts substantial public funding toward a certificate-based delivery system and broadens who may act as a caregiver, which could increase access but also impose new administrative demands on states and providers. The religious protections carve out explicit exemptions and private rights of action, which may help religious providers maintain autonomy but could raise concerns about uniform application of nondiscrimination standards.
The fraud-prevention pilot adds a protective layer against improper payments, yet its outcomes depend on state capacity and data integration. Repealing the dependent care tax credit reduces a traditional tax-based subsidy for families, replacing it with direct CCDBG funding; this is a major policy reorientation with broad budget and administrative implications that will require careful monitoring of outcomes and equity.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.