In a speech in Ashton, Pennsylvania on September 13, 2016, presidential candidate Donald Trump unveiled his plan for child care reform that includes an expansion on current tax benefits and adds temporary benefits for mothers caring for newborns to the existing unemployment insurance system.

According to the Trump plan document, "Current federal policies regarding child and dependent care do not reflect either the needs of American families or the contributions of women to the American workforce. The high cost of quality care burdens working families while the tax code provides disincentives for women to reenter or enter the workforce. Our plan will transform child and dependent care to meet the needs of 21st century families, empowering parents — not bureaucrats."

Following are highlights of the plan.

1. Dependent care savings accounts (DCSA). The Trump plan would give taxpayers the option of opening a DCSA account to cover current and future childcare or eldercare expenses. Up to $2,000 per year of DCSA contributions would be exempt from taxation, and account balances would roll over from year to year so that taxpayers can accumulate savings for future expenses. DCSAs would be funded by immediate family members and/or employers.

— DCSA for childcare. In addition to childcare expenses, withdrawals could be made from a DSCA by parents to enroll their children in a school of their choice or for other enrichment activities that prepare their children for their future. Any funds remaining in the DCSA when children reach age 18 could be used to fund their higher education expenses.

To encourage low-income families to establish DCSAs for their children, a federally-funded 50% match on parental contributions of up to $1,000 per year would be available.

— DCSA for eldercare. Withdrawals would be allowed for an elderly dependent's adult day care, in-home or long-term care service expenses.

2. Six weeks paid leave for new mothers. The Trump plan would modify the existing unemployment insurance (UI) system to include up to six weeks of paid leave for new mothers to care for their newborns. The Trump plan estimates this added temporary unemployment benefit would cost an additional $2.5 billion annually at an average benefit of $300 per week. The Trump campaign suggests this cost could be recovered by reducing some $5.6 billion per year in improper UI benefit payouts and by implementing the proposals in the administration's fiscal year 2017 budget regarding program integrity.

According to the plan document, by funding paid leave in this way "it will not be as financially onerous to small businesses when compared with mandating paid leave."

3. Employer incentives to provide childcare in the workplace. The Trump plan would give businesses incentives to provide childcare at the workplace by expanding on the existing tax credit for onsite childcare facilities and by allowing businesses the same income tax exclusion allowed to individuals for childcare costs and DCSA contributions.

— Increase in employer tax credit for childcare facilities. Under legislation enacted in 2001, businesses providing an appropriately licensed on-site childcare facility may claim a tax credit of up to 25% of their facility expenditures, plus 10% of resource and referral costs, up to a limit of $150,000 per calendar year; a portion of the credit is recaptured if the facility is kept in service for less than 10 tax years. The Trump plan would increase the cap, shorten the recapture period, and devise ways for companies to pool resources in order to make the credit more attractive.

4. 100% above-the-line deduction for child care costs. The Trump plan would allow an above-the-line tax deduction for 100% of childcare costs incurred for children from birth to age 13 and would be available to adoptive parents as well as foster parents who are legal guardians. The exclusion would be available for up to four children per family and would be limited to the average cost of childcare in the state of residence for the age of the child.

— Expand eligible care givers. The exclusion would apply to a variety of different types of childcare — institutional, private, nursery school, afterschool care, and enrichment activities. The benefit would also be available to families whose caregivers are stay-at-home parents or grandparents.

5. 100% above-the-line deduction for eldercare costs. The Trump plan would allow an above-the-line deduction of up to $5,000 per year of eldercare costs necessary to keep a family member working outside the home. The deduction would apply to such costs as home care or adult day care for elderly dependents when those expenses are necessary to keep family members in the workforce.

6. Increase the Earned Income Tax Credit (EITC) for child care. For lower income taxpayers who would not benefit from the above-the-line tax deduction, the Trump plan would provide an increase in the EITC up to half of the payroll taxes paid by low-income taxpayers with an income limitation of $31,200.

7. For parents working full time at $15 per hour, the EITC increase under the Trump plan is projected at $1,200 per year; eligible taxpayers would be allowed to divert this amount to the proposed DCSA account.

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