A new way to help your employees with child care

New legislation means changes to child care credits for your employees and their families—learn how this impacts your organization.

With at least one parent employed in over 91% of families with children, the need for reliable care is a critical issue for the modern workforce. For many of your employees, the stress of finding affordable child care or backup care is a constant struggle. The financial burden of these costs can be overwhelming, directly impacting their wellbeing and productivity at work. As a result, many employers are now prioritizing backup care and other childcare benefits, with some studies showing they can lead to a significant decrease in employee absenteeism and a higher rate of talent retention.

The One Big Beautiful Bill Act (OBBBA) is recent U.S. legislation that contains a provision that may offer significant relief, aiming to ease the financial strain of care costs on families. Through key provisions of this act, you can help your employees navigate these changes, ultimately supporting their financial health and, by extension, their emotional health and peace of mind.

New rules for child care tax credits

The OBBBA introduces significant changes to several key tax credits and plans that can put more money back in your employees’ pockets:

• Child Tax Credit: Starting with the 2025 tax year, this credit will increase from $2,000 to $2,200 per child and will be adjusted for inflation.
• Child and Dependent Care Tax Credit (CDCTC): For the 2026 tax year, lower-income families may receive a tax credit of up to 50% on eligible child care or dependent costs (up from 35%).
• Dependent Care Assistance Plans (DCAPs): Also effective in 2026, the limit for these plans will be raised from $5,000 to $7,500 for individuals and joint filers.

However, while these changes are great for struggling parents, we know that financial support is only one part of the equation. Finding and securing reliable, quality care to take advantage of these changes may still feel like a challenge.

How Cleo is already supporting employees

Cleo’s concierge services can be a powerful tool for companies and their employees to maximize the benefits of the OBBBA. Cleo can help your employees with:

• Education and awareness. A common problem with DCAPs is that employees don’t fully understand how they work or what expenses are eligible. Cleo’s concierge services can help bridge the gap in employee understanding. Our Guides can proactively educate employees about the new $7,500 annual limit and explain how to enroll and use the benefit for everything from nannies and daycares to after-school care.
• Expense navigation. The rules around eligible expenses can be confusing for employees. Our Guides can help families understand if their specific childcare arrangements—including backup care, summer camps, or specialized care for a child with a disability—are eligible. This ensures employees can confidently use the full amount of their pre-tax funds.
• Cleo’s Care Activity Team (CAT). CAT is a team of specialists that helps employees navigate the complexities of finding and securing quality child care and backup care by researching, scheduling, and securing care on their behalf. Whether it’s finding a new daycare, a trusted nanny or babysitter, or even specialized support like a postpartum doula, the Care Activity Team is there to handle the legwork, saving our members up to 10 hours per request.

At our core, Cleo believes that when we invest in our employees’ lives—both inside and outside of the office—we build a stronger, more resilient, and more compassionate workplace. The combination of new financial relief from the OBBBA and the practical, hands-on support from Cleo can give your employees the tools they need to thrive.