Imagine if life’s major moments such as childbirth or grappling with a dementia diagnosis and everyday moments such as going to work or managing family responsibilities were all treated with respect, importance, and support. What if families had paid time to care for their loved ones when they needed it and a wide range of choices among affordable, safe, and nurturing care options staffed by a well-compensated and trained workforce when they needed those? People have been fighting for these common sense care policy options for years, including investments in child care, paid leave for all, and home and community-based services for older adults and people with disabilities.
Instead of moving toward that vision, Republicans in Congress and the Trump administration have just created an even bigger gap between the future families want and their current realities: the Republican megabill that was recently passed and signed into law is filled with tax cuts for corporations and the ultrarich while slashing funding to programs that provide basic necessities for everyone else.
Corporations and the Ultrarich Win; Families and Caregivers Lose
It has been getting harder and harder for most people to afford a decent life in America. The Republican megabill that Trump signed into law on July 4, 2025 will make it even harder. With this law, the GOP has taken unprecedented steps to prioritize the financial interests of corporations and the wealthy over the needs of children and nonwealthy families by pursuing policies that will widen the income and class divide and make it more difficult for families to access the care and services they need. The law will raise families’ food and health care costs, increase poverty and hunger, reduce the services that states can provide (as a result of decreased federal funds to states), and take health coverage away from millions of people.
Most distressingly, to the extent that the megabill does address care, it does so in a way that does not solve the care challenges millions of families face every day. First, because of drastic cuts the law makes to health care funding, caregivers and care recipients—especially those with low incomes—will be worse off as a result of this new law. Furthermore, by increasing income inequality, the law will widen the gap between those who have wealth and access to care and those that have neither. Finally, some of the child care and paid leave provisions contained in the law rely on voluntary participation from businesses—an approach shown not to work—leaving people at the mercy of their employers.
Undermining Care for Older Adults and Disabled People
The Republican megabill cuts nearly $1 trillion from Medicaid over ten years, gutting the program that provides much of the long-term care received by older adults and disabled people, including home and community-based services (HCBS). More than 7.8 million disabled people and older adults rely on Medicaid for supports and services in their homes and communities, and hundreds of thousands more need them but remain on waitlists. The massive cuts and cost shifts to states in Medicaid will make it even harder to access needed services.
States may implement these cuts by reducing payment for home- and community-based care, increasing the staffing shortages that already exist. Because HCBS are optional for states to provide, it’s often among the first of essential care programs targeted for cuts at the state level. In fact, historically, every single state has cut access to HCBS when federal Medicaid funding has decreased. Without Medicaid HCBS, people with disabilities and older adults who need care will likely have nowhere else to turn, making them more likely to end up in institutional settings, experience preventable hospitalizations, and are likely to face a decline in overall well-being.
The women of color, including immigrant women, who disproportionately comprise the home care workforce are already struggling with low pay and few benefits. Medicaid cuts and other attacks on this workforce will make it even harder to recruit and retain people to work in this sector. Furthermore, the paid care this workforce delivers is frequently supplemented by family caregivers—many of whom also often rely on Medicaid themselves, either to provide their health coverage or to support them with training, support groups, respite care, and even direct payments. They may lose coverage due to new work requirements. The Medicaid cuts contained in the law will make it harder to access support and coverage, trapping families and caregivers in a vicious circle, competing for dwindling resources.
In addition to the potential loss of long-term services and supports, seniors and disabled people may lose other health care and food assistance. Medicaid coverage helps seniors cover Medicare premiums, out-of-pocket costs, and benefit gaps such as dental services. The new law rolls back rules facilitating such coverage and puts state coverage of such services at risk. It also contains deep cuts to the Supplemental Nutrition Assistance Program (SNAP) on which 8 million seniors rely. It will continue to widen the vast gap between those with wealth who can live independently with a disability or age with dignity, and those without wealth who cannot.
Undermining Care for Children and for People with Serious Medical Needs
Today, child care typically costs families more than housing or attending a public college. And even if families can afford such high prices, they often can’t find programs that meet their needs because the supply is insufficient. In addition, this care crisis is made worse because there are millions of people in the United States that need paid family and medical leave to both give and receive care and yet do not have it.
The Republican megabill does little to solve the problems of the high costs and low availability of child care and the lack of paid leave. While corporations and shareholders will see a windfall from the law, family budgets will be increasingly stretched, and the child care sector will continue to face the challenges of child care deserts, high prices for families, and low compensation for early educators.
The law is purported to promote care by expanding two already existing tax credits for corporations—one for those who provide some paid leave (45S) and one for those who provide child care (45F). But these two tax credits do next to nothing in terms of increasing paid leave to workers or providing more child care options to the vast majority of families.
Section 45S provides a small tax credit for employers who offer some of their employees a portion of their wages when they need leave. But data from the Department of Treasury on this tax credit—which started in 2017—shows that it does not increase access to leave. Instead, it is simply a corporate giveaway to the largest U.S. corporations, handing them millions of dollars for something they already do.
Section 45F provides employers with a tax credit for spending resources on child care-related expenses. The law increases the amount of credit corporations can take, raising it higher for small businesses and allowing employers to pool resources to jointly contract with a child care provider. In its current form, take up by companies has been quite low. According to nonpartisan Congressional Research Service, available data indicate that the existing 45F credit is rarely claimed (less than 1 percent of all corporate tax returns include it), suggesting it is not the right route for expanding the supply of child care.
Another provision included in the law expands the Dependent Care Assistance Plan, which allows parents whose employers participate to opt into accounts that set aside pre-tax dollars to pay for child care expenses. While perhaps a boon to workers at companies that participate, this policy does nothing to increase the supply of child care or help families who do not have the resources to pay high prices up front to afford child care. The regressive nature of the tax code also means that families with higher incomes receive more of a benefit from this program.
The problem with relying on employer-based programs to increase paid family and medical leave and child care options is that such programs typically do not increase overall care resources, but rather actually limit the number of people who have access and instead make families rely on some family member “winning the boss lottery.” Generally, such an approach leads only to higher-income families having access, while lower-income and middle-class families are left behind.
Furthermore, employer-based care programs can also create instability for families, because changing or losing a job can then mean losing child care or paid leave. And even remaining employed is no guarantee of security, as there has been a trend of employers changing their policies and backing out of providing child care, so even those who are inspired to start, may ultimately change course and leave employees struggling. For example, in January 2024, Google announced it was closing the child care center near its headquarters and laying off the center’s seventy-three staff. In November 2022, when Elon Musk took over Twitter/X, he sent out an internal memo revoking a series of benefits including a child care allowance.
Far from improving things, the Republican megabill will actually make the child care crisis worse by further reducing resources in an already under-funded sector. At least 230,000 child care workers—about a quarter of the providers—rely on Medicaid for themselves, , because many cannot afford or are not offered employer-sponsored health coverage, and are not paid family-sustaining wages. The megabill will cause some early educators to lose Medicaid, Affordable Care Act health coverage, and SNAP food assistance benefits, making them more likely to end up in even more financially precarious situations.
Moreover, families that also lose their health care and food assistance will have an even harder time affording child care. Their stretched family budgets will have to cover rising prices using fewer resources. The law will also put a huge squeeze on state budgets, as states scramble to address the coming shortfall in funds for health care—which means that in the states that have invested in or want to invest in supporting their residents’ child care needs, those child care investments will be at risk.
Finally, while the Republican megabill does include an expansion to the Child and Dependent Care Tax Credit (CDCTC), it does so inequitably. On the one hand, the CDCTC is the only tax policy in current law that explicitly helps families with caregiving costs and is essential for helping some families partially meet the growing costs of care. However, the policy is not a substitute for comprehensive child care policy that boosts supply, raises wages for early educators, and makes child care affordable regardless of your income. The additional tax credit that some families will receive is helpful, but a drop in the bucket compared to the national average yearly child care price of more than $13,000. Most families won’t receive the maximum benefit because the lowest income families are the least likely to owe taxes or to have enough tax liability to benefit.
In addition, the tax credit only helps families who have resources to spend money on child care upfront and who can find child care that meets their needs.
The Child Tax Credit and Child Accounts Won’t Mitigate the Harms
The Republican megabill contains two provisions that will give more money directly to parents, but the amount of funds are insufficient to make up for all the harm the law does and the provisions are regressive, providing greater benefits to wealthier families.
The Republican megabill permanently increases the value of the Child Tax Credit (CTC) from $2,000 to $2,200 per child, a benefit for the middle-income and higher-income families who usually have tax liabilities, and adjusts this amount based on inflation after 2025. The law also permanently limits the “refundable” portion of the CTC—the maximum amount that can be received by families with little or no federal tax liability, which includes many lower-income families—at $1,700 per child, and links this amount to inflation. Research shows that when CTC was fully refundable, it had a direct impact on alleviating poverty for children. The law’s inclusion of limits to the refundable portion means about 17 million children will be excluded from the full CTC because their families earn too little. By contrast, the law permanently ensures that high-income families with incomes up to $400,000 for married couples and $200,000 for single individuals continue to be eligible for the full CTC, instead of phasing out the credit starting at incomes of $110,000 married couples and $75,000 for single taxpayers, as was the case before President Trump’s 2017 tax law. Finally, the law newly requires a Social Security number from both the child(ren) and the claiming parent (at least one parent, if parents are married and filing jointly). This change will cause more than 4.5 million citizen and legal permanent resident children to lose access to the credit compared to today’s CTC, which requires a number for the child(ren) alone.
In addition, the law includes a one-time federal payment of $1,000 for U.S. families with babies born from 2025 to 2028. While the idea is to help set up accounts in which families can accumulate savings for their children, much like Baby Bonds, the reality is that these accounts are likely to be utilized most by families that need them the least. The accounts are structured in a way that will likely lead to families that already have significant wealth and income simply accumulating more: families are allowed to add up to $5,000 per year into the savings accounts, and employers can contribute up to $2,500 a year, which would not be counted as income toward the working family member. The parents with the most resources are more likely to max out their contributions, and those with the most generous bosses will gain the most from it. Otherwise, the one-time investment will compound over time, rising with the market, and only be taxed when children access them once they reach 18 or older.
The Wrong Direction
Taken in total, the Republican megabill, even with its various tax credits and child accounts included, will make it much more difficult and costly to raise a family and care for each other in America.
In doling out rewards and benefits to the ultrarich and corporations while the rest of the country struggles to meet their needs for health care, child care, paid leave, and assistance at home for older and disabled adults, this megabill continues to make these challenges worse. Solutions to ease the difficulties facing families are clear, but they aren’t in this law. Lawmakers need to find ways to undo all this harm before the megabill sends the country tumbling in the wrong direction, and then take the next step forward: transformational, positive action on care.
The authors would like to thank Ruth Friedman, Rachel West, Jeanne Lambrew, and Emma Ford for their contributions.
Tags: care economy, dependent care, medicare, medicaid, disability, child care
GOP Megabill Makes It Harder for People to Provide Care for Each Other
Imagine if life’s major moments such as childbirth or grappling with a dementia diagnosis and everyday moments such as going to work or managing family responsibilities were all treated with respect, importance, and support. What if families had paid time to care for their loved ones when they needed it and a wide range of choices among affordable, safe, and nurturing care options staffed by a well-compensated and trained workforce when they needed those? People have been fighting for these common sense care policy options for years, including investments in child care, paid leave for all, and home and community-based services for older adults and people with disabilities.1
Instead of moving toward that vision, Republicans in Congress and the Trump administration have just created an even bigger gap between the future families want and their current realities: the Republican megabill that was recently passed and signed into law is filled with tax cuts for corporations and the ultrarich while slashing funding to programs that provide basic necessities for everyone else.
Corporations and the Ultrarich Win; Families and Caregivers Lose
It has been getting harder and harder for most people to afford a decent life in America. The Republican megabill that Trump signed into law on July 4, 2025 will make it even harder. With this law, the GOP has taken unprecedented steps to prioritize the financial interests of corporations and the wealthy over the needs of children and nonwealthy families by pursuing policies that will widen the income and class divide and make it more difficult for families to access the care and services they need. The law will raise families’ food and health care costs, increase poverty and hunger, reduce the services that states can provide (as a result of decreased federal funds to states), and take health coverage away from millions of people.
Most distressingly, to the extent that the megabill does address care, it does so in a way that does not solve the care challenges millions of families face every day. First, because of drastic cuts the law makes to health care funding, caregivers and care recipients—especially those with low incomes—will be worse off as a result of this new law. Furthermore, by increasing income inequality, the law will widen the gap between those who have wealth and access to care and those that have neither. Finally, some of the child care and paid leave provisions contained in the law rely on voluntary participation from businesses—an approach shown not to work—leaving people at the mercy of their employers.
Undermining Care for Older Adults and Disabled People
The Republican megabill cuts nearly $1 trillion from Medicaid over ten years, gutting the program that provides much of the long-term care received by older adults and disabled people, including home and community-based services (HCBS). More than 7.8 million disabled people and older adults rely on Medicaid for supports and services in their homes and communities, and hundreds of thousands more need them but remain on waitlists. The massive cuts and cost shifts to states in Medicaid will make it even harder to access needed services.
States may implement these cuts by reducing payment for home- and community-based care, increasing the staffing shortages that already exist. Because HCBS are optional for states to provide, it’s often among the first of essential care programs targeted for cuts at the state level. In fact, historically, every single state has cut access to HCBS when federal Medicaid funding has decreased. Without Medicaid HCBS, people with disabilities and older adults who need care will likely have nowhere else to turn, making them more likely to end up in institutional settings, experience preventable hospitalizations, and are likely to face a decline in overall well-being.
The women of color, including immigrant women, who disproportionately comprise the home care workforce are already struggling with low pay and few benefits. Medicaid cuts and other attacks on this workforce will make it even harder to recruit and retain people to work in this sector. Furthermore, the paid care this workforce delivers is frequently supplemented by family caregivers—many of whom also often rely on Medicaid themselves, either to provide their health coverage or to support them with training, support groups, respite care, and even direct payments. They may lose coverage due to new work requirements. The Medicaid cuts contained in the law will make it harder to access support and coverage, trapping families and caregivers in a vicious circle, competing for dwindling resources.
In addition to the potential loss of long-term services and supports, seniors and disabled people may lose other health care and food assistance. Medicaid coverage helps seniors cover Medicare premiums, out-of-pocket costs, and benefit gaps such as dental services. The new law rolls back rules facilitating such coverage and puts state coverage of such services at risk. It also contains deep cuts to the Supplemental Nutrition Assistance Program (SNAP) on which 8 million seniors rely. It will continue to widen the vast gap between those with wealth who can live independently with a disability or age with dignity, and those without wealth who cannot.
Undermining Care for Children and for People with Serious Medical Needs
Today, child care typically costs families more than housing or attending a public college. And even if families can afford such high prices, they often can’t find programs that meet their needs because the supply is insufficient. In addition, this care crisis is made worse because there are millions of people in the United States that need paid family and medical leave to both give and receive care and yet do not have it.
The Republican megabill does little to solve the problems of the high costs and low availability of child care and the lack of paid leave. While corporations and shareholders will see a windfall from the law, family budgets will be increasingly stretched, and the child care sector will continue to face the challenges of child care deserts, high prices for families, and low compensation for early educators.
The law is purported to promote care by expanding two already existing tax credits for corporations—one for those who provide some paid leave (45S) and one for those who provide child care (45F). But these two tax credits do next to nothing in terms of increasing paid leave to workers or providing more child care options to the vast majority of families.
Section 45S provides a small tax credit for employers who offer some of their employees a portion of their wages when they need leave. But data from the Department of Treasury on this tax credit—which started in 2017—shows that it does not increase access to leave. Instead, it is simply a corporate giveaway to the largest U.S. corporations, handing them millions of dollars for something they already do.
Section 45F provides employers with a tax credit for spending resources on child care-related expenses. The law increases the amount of credit corporations can take, raising it higher for small businesses and allowing employers to pool resources to jointly contract with a child care provider. In its current form, take up by companies has been quite low. According to nonpartisan Congressional Research Service, available data indicate that the existing 45F credit is rarely claimed (less than 1 percent of all corporate tax returns include it), suggesting it is not the right route for expanding the supply of child care.
Another provision included in the law expands the Dependent Care Assistance Plan, which allows parents whose employers participate to opt into accounts that set aside pre-tax dollars to pay for child care expenses. While perhaps a boon to workers at companies that participate, this policy does nothing to increase the supply of child care or help families who do not have the resources to pay high prices up front to afford child care. The regressive nature of the tax code also means that families with higher incomes receive more of a benefit from this program.
The problem with relying on employer-based programs to increase paid family and medical leave and child care options is that such programs typically do not increase overall care resources, but rather actually limit the number of people who have access and instead make families rely on some family member “winning the boss lottery.” Generally, such an approach leads only to higher-income families having access, while lower-income and middle-class families are left behind.
Furthermore, employer-based care programs can also create instability for families, because changing or losing a job can then mean losing child care or paid leave. And even remaining employed is no guarantee of security, as there has been a trend of employers changing their policies and backing out of providing child care, so even those who are inspired to start, may ultimately change course and leave employees struggling. For example, in January 2024, Google announced it was closing the child care center near its headquarters and laying off the center’s seventy-three staff. In November 2022, when Elon Musk took over Twitter/X, he sent out an internal memo revoking a series of benefits including a child care allowance.
Far from improving things, the Republican megabill will actually make the child care crisis worse by further reducing resources in an already under-funded sector. At least 230,000 child care workers—about a quarter of the providers—rely on Medicaid for themselves, , because many cannot afford or are not offered employer-sponsored health coverage, and are not paid family-sustaining wages. The megabill will cause some early educators to lose Medicaid, Affordable Care Act health coverage, and SNAP food assistance benefits, making them more likely to end up in even more financially precarious situations.
Moreover, families that also lose their health care and food assistance will have an even harder time affording child care. Their stretched family budgets will have to cover rising prices using fewer resources. The law will also put a huge squeeze on state budgets, as states scramble to address the coming shortfall in funds for health care—which means that in the states that have invested in or want to invest in supporting their residents’ child care needs, those child care investments will be at risk.
Finally, while the Republican megabill does include an expansion to the Child and Dependent Care Tax Credit (CDCTC), it does so inequitably. On the one hand, the CDCTC is the only tax policy in current law that explicitly helps families with caregiving costs and is essential for helping some families partially meet the growing costs of care. However, the policy is not a substitute for comprehensive child care policy that boosts supply, raises wages for early educators, and makes child care affordable regardless of your income. The additional tax credit that some families will receive is helpful, but a drop in the bucket compared to the national average yearly child care price of more than $13,000. Most families won’t receive the maximum benefit because the lowest income families are the least likely to owe taxes or to have enough tax liability to benefit.
In addition, the tax credit only helps families who have resources to spend money on child care upfront and who can find child care that meets their needs.
The Child Tax Credit and Child Accounts Won’t Mitigate the Harms
The Republican megabill contains two provisions that will give more money directly to parents, but the amount of funds are insufficient to make up for all the harm the law does and the provisions are regressive, providing greater benefits to wealthier families.
The Republican megabill permanently increases the value of the Child Tax Credit (CTC) from $2,000 to $2,200 per child, a benefit for the middle-income and higher-income families who usually have tax liabilities, and adjusts this amount based on inflation after 2025. The law also permanently limits the “refundable” portion of the CTC—the maximum amount that can be received by families with little or no federal tax liability, which includes many lower-income families—at $1,700 per child, and links this amount to inflation. Research shows that when CTC was fully refundable, it had a direct impact on alleviating poverty for children. The law’s inclusion of limits to the refundable portion means about 17 million children will be excluded from the full CTC because their families earn too little. By contrast, the law permanently ensures that high-income families with incomes up to $400,000 for married couples and $200,000 for single individuals continue to be eligible for the full CTC, instead of phasing out the credit starting at incomes of $110,000 married couples and $75,000 for single taxpayers, as was the case before President Trump’s 2017 tax law. Finally, the law newly requires a Social Security number from both the child(ren) and the claiming parent (at least one parent, if parents are married and filing jointly). This change will cause more than 4.5 million citizen and legal permanent resident children to lose access to the credit compared to today’s CTC, which requires a number for the child(ren) alone.
In addition, the law includes a one-time federal payment of $1,000 for U.S. families with babies born from 2025 to 2028. While the idea is to help set up accounts in which families can accumulate savings for their children, much like Baby Bonds, the reality is that these accounts are likely to be utilized most by families that need them the least. The accounts are structured in a way that will likely lead to families that already have significant wealth and income simply accumulating more: families are allowed to add up to $5,000 per year into the savings accounts, and employers can contribute up to $2,500 a year, which would not be counted as income toward the working family member. The parents with the most resources are more likely to max out their contributions, and those with the most generous bosses will gain the most from it. Otherwise, the one-time investment will compound over time, rising with the market, and only be taxed when children access them once they reach 18 or older.
The Wrong Direction
Taken in total, the Republican megabill, even with its various tax credits and child accounts included, will make it much more difficult and costly to raise a family and care for each other in America.
In doling out rewards and benefits to the ultrarich and corporations while the rest of the country struggles to meet their needs for health care, child care, paid leave, and assistance at home for older and disabled adults, this megabill continues to make these challenges worse. Solutions to ease the difficulties facing families are clear, but they aren’t in this law. Lawmakers need to find ways to undo all this harm before the megabill sends the country tumbling in the wrong direction, and then take the next step forward: transformational, positive action on care.
The authors would like to thank Ruth Friedman, Rachel West, Jeanne Lambrew, and Emma Ford for their contributions.
Notes
Tags: care economy, dependent care, medicare, medicaid, disability, child care