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Here’s How Much the Average Family Would Save on Childcare Under New Plan

Hint: It's a lot.

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Much of the attention around the Build Back Better Act, Joe Biden’s signature budget package, focuses on the recalcitrance of the conservative Democratic Senators who are threatening to torpedo the bill. But for American families, the important news is just how transformative the legislation would be, particularly for those struggling with the astronomical cost of childcare, the inability to take paid leave, and the need for more workplace protections. And a new report shows just how much families would save on child care alone.

A new analysis from the liberal think tank the Center for American Progress shows just how much working- and middle-class families stand to gain if the bill’s sliding scale limits on childcare costs are passed. And it turns out that families will save a crap-ton of money under the plan, if it becomes law.

The bill uses a metric called state median income (SMI) to calculate what kind and how much assistance families with childcare expenses would receive. Families making less than 75 percent of the SMI have their childcare costs entirely subsidized, making childcare free, with a progressive sliding scale for higher incomes up to 7 percent, a figure that is significantly lower than the nearly 10 percent of their income parents currently spend on childcare on average.

CAP’s analysis focuses on a hypothetical middle-class family making 135 percent of the SMI, one that would have its childcare expenses capped at 5 percent if the Build Back Better Act becomes law.

It shows the savings, on a state-by-state basis, that this family could expect based on an estimate of current childcare costs in each state from a national survey.

The results are dramatic. A family at this income level in every state would save money, from $31 a week in Alabama to $302 in the District of Columbia. The different amounts in each state reflect both the different current shares of income spent on childcare (from 6.5 percent in Alabama to 12.0 percent in Massachusetts) and the widely varying median incomes in each state.

In 32 states, families making 135 percent of SMI would save $100 or more. Annually, the Build Back Better Act would save these families between $5,000 and $6,500 annually in most states. That’s a huge amount of money, and that’s before you consider that, if extended, the expanded Child Tax Credit would add an additional $3,500 per child under the age of 5 to parent’s pockets.

Saving this much money on childcare would allow more parents, particularly mothers, to re(enter) the workforce, earn more income, and send those dollars back into the economy. And besides the economic benefits, there’s a simple moral argument for these reforms: becoming a parent shouldn’t sentence someone to financial stress, and affordable, quality childcare should be a basic expectation in a nation with the vast resources of the United States in 2021.

Curious to see how much you’ll save? Check out the list of how much the average earner would save in each state here.