Today, the National Taxpayers Union (NTU) named legislation led by Rep. Cindy Axne (IA-03) and Iowa Sen. Joni Ernst to its annual “No-Brainer” list, which highlights ten pieces of bipartisan and commonsense legislation that NTU recommends Congress pass in 2021.
The Improving Child Care for Working Families Act, introduced by Axne and Ernst in March, would expand Iowa families’ ability to pay for child care expenses by permanently increasing the cap on how much families can place in dependent care assistance plans (DCAPs) to $10,500.
The DCAP contribution limit was recently raised to $10,500 as part of the American Rescue Plan, but this change only applies for 2021. The permanent contribution limit, set at $5,000, has not changed since the program was created in 1986. Child care costs have risen exponentially in recent years, and the average cost for infant care in Iowa is $865 per month – just over $10,000 per year.
“The cost of child care is higher than average rent in Iowa, but the amount that Iowans can save for that care hasn’t been permanently changed since 1986. I’m glad that our bill to make that change has been recognized for the commonsense ‘no-brainer’ that it is,” said Rep. Axne. “We took the first step towards making this fix with the American Rescue Plan, and now we need to make the expanded cap on savings permanent.”
According to the Economic Policy Institute, infant care in Iowa cost 18% more per year than in-state tuition for a four-year public college.
Child care also costs 12% more than average rent in Iowa.
This legislation will expand families’ potential savings through these accounts, allowing them to better afford the cost of child care at no cost to employees or employers who utilize DCAPs.
The introduction of the Improving Child Care for Working Families Act was co-led by Rep. Brian Fitzpatrick (PA-01) and Sens. Maggie Hassan (D-NH), Thom Tills (R-NC), and Kyrsten Sinema (D-AZ).
The legislation has been endorsed by Bipartisan Policy Center, Save the Children Action Network, Early Care and Education Consortium, Employers Council on Flexible Compensation, National Taxpayers Union, HealthEquity, Exceptional Persons Inc., Iowa Primary Care Association, Iowa Association of Business and Industry, Iowa Women’s Foundation, and Black Hawk County Child Care Coalition.
Last year, the NTU named Axne’s Family Savings Flexibility Act as one of its “No-Brainers.”
That bipartisan legislation, introduced in May 2020, would nearly double the maximum annual contribution for health savings accounts (HSAs), a tax-advantaged employee benefit that can be used to help pay for qualified medical expenses like doctor’s office visits and procedures, prescription drug costs, and dental and vision care.