Representative Kristen McDonald Rivet (D-MI) introduced legislation that would expand the Earned Income Tax Credit (EITC) to provide working parents with up to an additional $5,500 per qualifying child under age 4.
Expanding the Earned Income Tax Credit for Young Children
The Working Parents Tax Relief Act of 2026, H.R. 8305, would amend IRC § 32(c) to increase the EITC for eligible filers with qualifying children under age 4. The bill’s primary provision would give qualifying filers up to an additional $5,500 per child under age 4, for a maximum of three children.
Under the bill, a filer with one qualifying child under age 4 would see the credit percentage increased by 42.24 percentage points. Filers with two or more qualifying children would see the credit percentage increase by 30.07 percentage points for each of their youngest three qualifying children under age 4. The phaseout percentage would also increase by five percentage points for each such qualifying child, up to three.
The bill would raise the maximum qualifying income for the EITC to nearly $100,000 for filers with children under age 4, extending the credit’s reach to more middle-income households. It would also require the Treasury Department to create an optional monthly payment program, allowing families to elect to receive the enhancement as advance monthly payments throughout the year rather than as a lump sum at tax time. The legislation would apply to tax years beginning after December 31, 2025.
According to PolicyEngine analysis, the Working Parents Tax Relief Act would cut taxes for over 4 million families and reduce the child poverty rate by 7% by 2035, with nearly 75% of the benefit going to families with incomes under $50,000.
Addressing High Costs for Families
McDonald Rivet introduced the bill to address mounting financial pressure on parents of young children. Child care alone costs an average of $28,000 per year, according to a press release, and the proposal targets the years when caregiving responsibilities and related expenses tend to peak.
“Bringing home a baby is the most magical moment of a parent’s life, but it is also the most expensive. Parents with toddlers today are working harder than ever, but still find it impossible to keep up with the out-of-control costs of housing, child care, groceries, and so much more,” McDonald Rivet said. “We need to cut their taxes now. Our bill puts thousands of hard-earned dollars back in their pockets, helping parents keep up with their bills while raising their families.”
Support for the Proposal
The bill has drawn backing from a wide range of policy organizations and advocacy groups. According to the Center on Budget and Policy Priorities (CBPP), the EITC lifted about 4.4 million people above the poverty line in 2024, including 2.3 million children, based on the Supplemental Poverty Measure. CBPP also notes that an EITC expansion can deliver more targeted assistance to low-income families than a Child Tax Credit expansion of equivalent cost, because of the EITC’s more targeted income structure.
“Congresswoman McDonald Rivet’s bold new idea will help working families navigate the skyrocketing cost of raising young children,” said Zach Moller, senior director of the Economic Program at Third Way. “The Working Parents Tax Relief Act of 2026 would deliver real relief for working- and middle-class parents, and Third Way applauds her leadership on affordability for families.”
“Parents are working harder and harder to get ahead in an economy that is becoming less and less affordable by the day,” said Bruce Lesley, president of First Focus Campaign for Children. “Families need a tax code that actually reflects our values, and goes further to support hard-working parents and their kids — that’s why Congress should pass the Working Parents Tax Relief Act of 2026.”
Additional supporters include the Detroit Regional Chamber, Americans for Tax Fairness, Chamber of Mothers, Economic Security Project Action, Center for Law and Social Policy, and several Michigan-based organizations, including the Flint & Genesee Chamber, Saginaw County Chamber of Commerce, and the Accounting Aid Society.
“The EITC alone cannot solve families’ child care affordability challenges, but it can help,” CBPP Director of Federal Tax Policy Kris Cox said in a thread on social media platform Bluesky. “Families with incomes close to the poverty line who pay for child care spent an average of about 17 percent of their income on care in 2021.”
For more on Earned Income Tax Credit rules under current law, see Checkpoint’s Federal Tax Coordinator 2d ¶ A-4201.
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