Trump’s budget bill will affect all aspects of the economy
The budget bill passed and signed the law touches on the lives of all Americans in one way or another. Will you get better or worse?
Sarah Foster, 35, quit her job in the summer of 2024 after the stress of raising a child and working full-time. She said she always has a parenting plan wrapped around when her nanny collapses.
Foster’s husband is a doctor, and she describes her family as middle to upper class. Still, she was worried about her ability to cover childcare for her two children. She knew she needed to focus on getting healthy in the short time she was leaving her career. She is now back part time.
Foster’s husband’s employer provides working parents with flexible spending accounts for dependent care. So foster parents can clean up at up to $5,000 before tax for childcare costs. President Donald Trump recently passed a settlement law that reached a limit of $7,500 in flexible spending accounts.
When Foster, who lives in San Antonio, Texas, first heard about the change, she laughed and said, “It’s great.”
She told USA Today:
Several changes to the new law are aimed at parents. Several changes, such as a newborn’s 1,000 savings account, are intended to encourage more children. But even if more parents and child care advocates say they won’t hurt the surface that fixes the American child care crisis, there’s the biggest increase in child care tax programs even below the law. These programs are as follows:
- The child and addiction care tax credit reimburses parents for childcare costs and is separate from the well-known child tax credit.
- Dependent care support programs. This allows parents to reserve tax-free money to pay for childcare costs, as well as the number of medical expenses.
- Employer-provided childcare credits will refund businesses to provide childcare to employees.
Full-time childcare for one infant is the highest monthly cost for some families in the United States. Parenting for two children is higher than rent in all 50 states, with a 2024 survey by SmartAsset that averages $25,000 a year in Washington, DC, and childcare costs higher.
“I think the settlement bill did little to do to raise children, and certainly there’s little to do with the scale of the need,” said Andrea Paraso, co-director of childcare for All Family Network, a national care policy advocacy group.
Paraso said it will reward employers who provide or subsidize childcare by saying “it doesn’t work.” Additionally, only middle and upper class families may benefit from an increased cap on flexible spending accounts.
Sen. R-Alabama, Sen. Katie Britt, is believed to have worked on the childcare provisions as part of a previous bill with Sen. Tim Kane, a Virginia Democrat, and introduced those provisions into what was previously called the “big beautiful bill.” She told USA Today that she insisted on child care benefits to the party and then met individually with her family and Senate colleagues.
“It felt like the time was here,” Britt told USA Today. “If we think about the Republican Party and us that we ran and won, we said, ‘We’re a party of parents, we’re a party of hardworking Americans.’ And I stood up at the meeting and said, “There’s no better way to deal with and support both of these groups than actually working on affordable and accessible childcare.”
What changes will the parenting programme be made to Trump’s tax and spending laws?
Sarah Litling, executive director of the fund for the first five years, said Republicans and Democrats have long supported expanding the tax benefits program.
Kane, a Democrat who was not available for the interview, said in a statement on March 5th of the March 5th:
The first five-year fund estimates that families with two young children with under $150,000 will see an additional $900 in tax refunds due to an expanded child and dependency care tax credit. The tax credit was last updated in 2001, Britt said.
Paying childcare costs using a flexible spending account through your employer can avoid paying taxes on additional $2,500 costs. Since 1986, working parents have been able to put $5,000 in pre-tax money into their accounts for childcare. The new law increased it to $7,500. This could be a $600 drop depending on your income.
“I told people, ‘Reagan was president when it last expanded,’ Britt told USA Today.
Another tax credit, known as the 45th floor, reimburses the business for a portion of what they spend to provide childcare for employees. But Litling said it was “outdated and businesses couldn’t really take advantage of it.” Britt said the program was also last updated in 2001.
The program was previously designed for large businesses and was allowed to get a quarter of a refund of up to $125,000. The law increases the tax credit to 40% costs, up to $500,000. The law also makes the program permanent, Britt said it would be more likely that large companies would establish on-site childcare facilities.
Additionally, the law expands the program to allow small businesses to earn up to $600,000 through the same tax credit and pool together to provide childcare benefits across the business. She said they need to include them because they “we’ve forgotten that small businesses are the backbone of our community.”
“I don’t have a mantle,” Britt said. “I will keep it up, but the fact that we have been able to bring about change in the region — that hasn’t been done and no one has yet to knock that wall down — I think this is monumental.”
“Disaster” or “Long-term progress?” Mixed response to Trump’s new tax bill
While the new law’s parenting changes may help some families, “we do little to improve affordability and access for those who need it most,” said Katherine Gallagher Robbins, a senior researcher at the National Partnership for Women and Family. Low-income families are unlikely to see the support outlined in the law, she said, and the law does not address child-rearing staffing issues and low wages for childcare workers.
“Overall, this bill is a disaster for caregivers and caregivers,” Robbins said. She pointed to food aid being stripped of millions of people due to Medicaid cuts that deeply affect people with disabilities of all ages and their caregivers. “The benefits from these changes will be pale compared to the overall harmful effects of the bill on children and families.”
Reshma Saujani, CEO and founder of Moms First, is looking forward to more about the change. Mom first lobbyed on Capitol Hill and won 25,000 signatures from Moms urging Trump and Congress to make parenting a priority. The law is evidence, Saujani said the bipartisan business movement “can have real consequences for families.”
“This tax bill includes painful cuts for many families, but it has also made progress in parenting for a long time,” Saujani said. “For the first time in decades, we are seeing new federal investments that will help work parents provide care and encourage employers to provide it.”
It’s a step in the right direction, Foster said, but he said there’s still a long way to go to support American parents. Individual cultures in the country, she said, raise each family on their own and find parenting solutions.
“Our system is not set up to support people with children,” she said.
Madeline Mitchell’s role in covering women and caregiving economy at USA Today is supported by partnership with An extremely important venture and Journalism Funding Partner. Funders do not provide editor input. You reach Madeline with memitchell@usatoday.com and @maddiemitch_ x.
