Bill > HB4056

This bill establishes a child care savings program that allows individuals to open special savings accounts designed to help parents pay for child care expenses. Beginning January 1, 2026, individuals can open a child care savings account at a financial institution to save money for child care costs for dependents under 14 years old. Account holders can contribute cash and marketable securities, and other people can also contribute to the account. The account provides tax benefits, with contributions and interest being exempt from taxation, and withdrawals used for eligible child care expenses (such as costs necessary for employment, education, or job searching) also being tax-free. If funds are withdrawn for non-eligible purposes, a 10% penalty will be applied, with some exceptions like hardship withdrawals, transfers between child care savings accounts, bankruptcy, or the death of the account holder. Account holders must maintain detailed records and submit documentation with their tax returns, including account statements, Form 1099, and receipts for eligible expenses. Financial institutions are not required to track the use of funds or ensure compliance with the program's rules. The program will be administered by the state treasurer, and the bill is contingent on the passage of a related House Bill.

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https://legislature.mi.gov/Bills/Bill?ObjectName=2025-HB-4056