Rep. Sewell Announces Over $732 Million in Funding from the American Rescue Plan to Keep Alabama Child Care Providers on the Job and Keep Costs Down for Working Families
Washington, D.C. — Today, U.S. Rep. Terri Sewell (AL-07) announced over $732 million in additional federal funding to the State of Alabama through the American Rescue Plan. This funding will help child care providers open safely, keep workers on the payroll and lower child care costs for hardworking families.
“The COVID-19 pandemic has caused a child care crisis. Across Alabama, providers have been forced to lay off and furlough workers just to stay afloat.” said Rep. Terri Sewell. “At the same time, hardworking families have been struggling to access basic child care services. That’s why I am thrilled to announce over $732 million in additional federal funding for child care through the American Rescue Plan. This funding will provide a critical lifeline to our child care providers and will help our economy bounce back by getting parents back to work.”
The total amount of $732,997,365 comes as part of two programs through the American Rescue Plan:
- $451,360,337 from the Child Care Stabilization Fund to help child care providers reopen or stay open, provide safe and healthy learning environments, keep workers on payroll, and provide mental health support for educators and children.
- $281,637,028 in flexible funding from the Child Care Development Fund to help Alabama make child care more affordable for more families, increase access to high-quality care for families receiving subsidies, increase compensation for early childhood workers, and meet other care needs in the state.
The American Rescue Plan also includes a historic increase in support for child care through the tax code, helping millions of working families afford needed care. Rep. Sewell played a critical role in drafting the expansions of the Child Tax Credit and the Earned Income Tax Credit in the American Rescue Plan, which are projected to cut child poverty in the United States by more than a half:
Last year, a family claiming a Child and Dependent Care Tax Credit (CDCTC) got less than $700 on average towards the cost of care, and many low-income working families often got nothing. Thanks to the historic expansion of the CDCTC in the American Recovery Plan, a median income family in Alabama with two kids under age 13 will receive up to $8,000 towards their child care expenses when they file taxes for 2021, compared with a previous maximum of $1,200.
- In 2020, the CDCTC provides a tax credit typically capped at $600 for one child for families with at least $3,000 in eligible expenses, and capped at $1,200 for two children or more for families with at least $6,000 in child care expenses.
- Under the American Rescue Plan’s expansion of the CDCTC, all families with incomes below $125,000 will save up to half the cost of their eligible child care expenses, getting back up to $4,000 for one child and $8,000 for two or more children when they file taxes for 2021. Furthermore, families making between $125,000 and $438,000 can receive a partial credit.
- For the first time, the CDCTC will be fully refundable, making the credit fairer by allowing low-income working families to receive the full value of the credit towards their eligible child care expenses regardless of how much they owe on their 2021 taxes.
More details can be found here.