Establishing refundable child and dependent care tax credits (CDCC) is a suggested strategy to defray the cost of care for children and other dependents (NCCP-Hartig 2014, Urban-Maag 2011), and encourage work in low income families (Urban-Maag 2011). Available evidence suggests that the lowest income families rarely claim the nonrefundable federal credit, as their tax liability is not high enough to benefit from it; the federal credit is most often taken by middle and higher income families with larger tax liabilities (Forry ND, Anderson EA. The Child and Dependent Care Tax Credit. Marriage & Family Review. 2008;39(1-2):159–76.
Link to original source (journal subscription may be required for access)Forry 2006). A study of the 2003 expansion of the CDCC also suggests increasing the amount of expenses that qualify for the credit may increase spending on child care (Miller 2015a). Additional evidence is needed to confirm effects and determine optimal tax structure and benefit amounts.

Early childhood experiences have a large impact on child development; increased access to higher quality child care could improve educational and financial outcomes among lower income families (NCCP-Hartig 2014).

A 2015 report projects that making the federal child and dependent care tax credit fully refundable, and increasing the percentage of costs reimbursed would reduce child poverty by 1% (146,500 children) and enable 101,000 parents to work, at a cost of approximately $1.6 billion (CDF 2015).