Under current law, workers can exclude from their taxable income up to $5,000 of employer-provided child-care expenses. A separate provision of the federal tax code excludes from income benefits provided to members of the uniformed services, but it's unclear whether child-care benefits were intended to be included in that provision. The military provides extensive child-care benefits. The tax bill passed by the Finance Committee today would clarify that child-care benefits provided to military personnel would be excluded from income.
The bill passed today also provides that military appointments would be treated as scholarships for the purposes of educational savings accounts. This means that families would not face a tax penalty for planning ahead for secondary education in the event that a child has the opportunity to serve at one of the military academies.
The bill's cost is offset by an extension of IRS user fees on certain products, authorizing the IRS to enter into agreements that provide for payment, and reforming the tax treatment of individuals who expatriate.
"This bill pays respect to the men and women making sacrifices and, in many cases, risking their lives to protect and defend freedom," Grassley said. "The full Senate should pass the bill as soon as possible."
Grassley said he hopes the full Senate will take up the bill by the end of this month.
Last year, in the last Congress, the Finance Committee and then the full Senate passed a very similar bill to the bill passed today. That bill, also co-authored by Grassley, underwent changes in the House of Representatives and never received final approval before Congress adjourned for the year.