PROVIDENCE, RI – In an effort to support the health and development of our children and our economy, Congress recently passed the American Rescue Plan.  This new law will help the nation recover from the dual COVID-19 health and economic crises.  It provides major relief to individuals, families, small businesses, communities, and states and represents the biggest investment in child care and ending child poverty since World War II.

Today, U.S. Senator Jack Reed joined with parents and leading child advocates at Federal Hill House in Providence to outline a series of measures in the new law that will help lift America’s youngest citizens out of poverty, get children safely back into classrooms, invest in high-quality child care and early childhood education, and put more money directly into the pockets of working parents.

Senator Reed, a senior member of the Appropriations Committee, says the law provides $93 million in new federal funding for child care in Rhode Island.  This new funding comes on top of over $32 million for Rhode Island’s emergency pandemic child care relief efforts that Senator Reed helped secure in previous COVID-19 relief measures.

The new $93 million for Rhode Island child care includes $57 million in child care stabilization funding to support child care providers throughout the pandemic and $36 million for the Child Care and Development Block Grant (CCDBG) program.

And starting Monday, March 29, the Rhode Island Department of Human Services will open up an application process to administer $23.9 million in federal grants to support and stabilize Rhode Island's child care industry.  The grants were made available under the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSA), also known as the ‘coronabus’ law, that was signed in December.

All licensed child care providers are eligible to apply for the federal grants, which range in amounts from $3,000 to up to $50,000 per child care site.  Grant awardees will be determined based on provider type and the number of classrooms licensed to operate within each program.

The state plans to post application details and criteria will on:

“COVID-19 demonstrated that child care providers are essential workers and that access to high-quality child care is critical to our economic future.  These federal investments will make a tremendous difference for families, help people get back to work, and help give more kids a healthy and strong foundation to thrive,” said Senator Reed.

Elizabeth Burke Bryant, Executive Director of Rhode Island KIDS COUNT stated: “The American Rescue Plan provides critical investments in children and families, from $93 million in crucial funding for child care that is essential to high quality early learning and parents’ ability to work, to additional funding for Head Start and child abuse prevention services.  It also provides $415 million for K-12 education, which is an opportunity to address longstanding racial and ethnic disparities by providing resources for equitable policies and practices.  This education funding can be used to meet the social, emotional, mental health and academic needs of students hardest hit by the pandemic, including students of color; to address learning loss and recovery; and to provide funding for critical summer, afterschool and other extended learning programs. The historic increase in the Child Tax Credit included in this legislation will lift thousands of Rhode Island children out of poverty.  Taken together, these investments in children and families will make a life-changing difference to children's futures as they lead the state and the nation in years to come.”

“At Federal Hill House we’ve seen firsthand how the pandemic and accompanying economic disaster has impacted the children, families, and low-income neighbors who access our services. Tax credits and investment in childcare and education will play a critical role in how our society overcomes not only the hardships of the past year, but also the high levels of poverty and inequity that existed prior. We are grateful for the leadership and support of Senator Reed and his esteemed colleagues to bring this much-needed investment to Rhode Island,” said Kimberly Fernandez, executive director of Federal Hill House.

“This pandemic has shown a sharp spotlight on the need to improve the economic security of the thousands of workers we have finally come to realize are “essential” to our community well-being,” said Rachel Flum, Executive Director of the Economic Progress Institute.  “It is a moral, economic and racial equity imperative to enact federal and state policies to address this crisis.  The Child Tax Credit, the Earned Income Tax credit and increases in the minimum wage are sound policies that are needed not only during the Pandemic but for the long-term.”


The American Rescue Plan also expands the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) for 2021.  According to the Center on Poverty and Social Policy at Columbia University, the poverty reduction efforts in the law could cut child poverty nationwide in half.

Additional Investments in Child Care, Early Childhood, and Families in the American Rescue Plan for Rhode Island include:

  • Provides an estimated $415 million for Rhode Island’s K-12 schools.
  • $3 million for Rhode Island Head Start grantees.
  • Nearly $1 million to prevent child abuse through the state Child Abuse Prevention and Treatment Act (CAPTA) grant program ($277,350) and the state community based child abuse prevention grants (CB-CAP) ($686,440).

Tax Credits to Help Lift Individuals Out of Poverty, Help with Child Care, and Put More Money in Pockets of Working Families include:

Child Tax Credit

The law also includes an initiative overhauling the Child Tax Credit for 2021, which is available to families with higher income limits than the EITC.  The expansion could help lift 4.1 million children out of poverty, including an additional 8,000 children in Rhode Island.  And an estimated 91% of Rhode Island children will now benefit from the law’s CTC changes.

The law expands the credit to $3,600 for children under age 6 and $3,000 for children ages 6 through age 17.  The normal tax credit is $2,000 per child under 17.  The law also makes the credit fully refundable, ensuring families who need this credit the most receive its full benefit.

Families will also receive half of their expected 2021 credit in regular payments instead of a lump sum, providing stable income for families in need.

Child and Dependent Care Credit and Employer-Provided Dependent Care Assistance

In addition to the funding to stabilize the child care sector and expand subsidies for working families, the American Rescue Plan also increased the tax credit for child and dependent care to cover up to 50 percent of a taxpayer’s first $8,000 in qualifying child and dependent care expenses, and makes the credit fully refundable.

It also increases the qualifying expenses cap from $6,000 to $16,000 for two or more qualifying children, and the maximum credit rate increases from 35 percent to 50 percent for families with less than $125,000 of income. These changes only apply for 2021.

The maximum exclusion for employer-provided dependent care assistance also increases from $5,000 to $10,500 for 2021.

Earned Income Tax Credit

To support low-income workers, the American Rescue Plan expands the Earned Income Tax Credit (EITC) for individuals without qualifying children.

The law includes a one-year increase to the EITC for lower-income residents who do not have qualifying children and broadens eligibility, with the maximum credit for people without children increasing to $1,502, up from $543.

The law also temporarily eliminates the upper age limit for eligibility, normally set at age 65, and temporarily lowers the minimum age eligibility from 25 to 19 years old for most workers.

According to the Center on Budget and Policy Priorities (CBPP), the EITC expansion will put more money into the pockets of 48,000 childless Rhode Island workers who are facing economic hardship.