Improving Child Care for Working Families Act of 2025

This legislative proposal seeks to amend Section 129(a)(2)(A) of the Internal Revenue Code of 1986, which governs the exclusion for dependent care assistance programs. The primary goal is to provide enhanced tax benefits for working families by increasing the amount of employer-provided dependent care assistance that can be excluded from an employee's gross income. Specifically, the bill raises the maximum exclusion limit from $7,500 to $10,500 for individuals. For married individuals filing separately, the limit would increase from $3,750 to $5,250 (half of the new $10,500 amount). These amendments will apply to amounts paid or incurred in calendar years beginning after the date of the Act's enactment, offering significant financial relief for child care costs.