Why Clinton's Proposed Tax Break for Families With Kids Is Such a Big Deal

In a political fortnight defined by fat shaming and boasts about sexual assault, an honest-to-goodness policy proposal has entered the fray.

Hillary Clinton, buoyed by polls showing that Trump is losing support among women, has proposed a new tax plan to help families afford child care. Clinton has made it a campaign goal to cap those costs at 10% of a family's income. While this new proposal won't by itself accomplish that goal, it would make it more attainable.

If enacted, Clinton's plan would double the child care tax credit from $1,000 to $2,000 per kid for families with children aged four and under. The tax break will be refundable, which means that even families that don't pay income taxes will see a benefit. The increased credit will cost between $150 billion and $200 billion, according to the Clinton campaign, and will be paid for by increased taxes on the wealthy that Clinton has already enumerated.

"The proposed change is relatively straightforward," explains Mike Piper, a certified public accountant in Manitou Springs, Colo., and author of the Oblivious Investor blog. "The change would make the credit refundable to a larger portion of taxpayers. A refundable credit is one that you can claim even if your income tax is already zero. That is, refundable credits can effectively reduce your income tax below zero."

Tax credits are considered more valuable than deductions or exemptions because they result in a dollar-for-dollar reduction of your tax bill. A deduction, by contrast, lowers the amount of your income on which you're required to pay taxes. This is an important distinction because Trump has proposed increasing the tax deduction for families with kids; that proposal would mostly benefit richer Americans who pay taxes. To offset this, Trump has proposed expanding the Earned Income Tax Credit, which would benefit poorer Americans.

Many parents currently receive a $1,000 tax credit for each child. But because that credit begins to phase out for married joint filers starting at $110,000 in adjustable gross income, higher earners are often unable to take full advantage of the credit. “There is a $50 reduction for every $1,000 earned above that level,” Naomi Ganoe, a CPA and director at the accounting firm CBIZ MHM, told Money last spring. “It doesn’t take very long before you earn too much to see the credit.” Right now, for example, a family making $115,000 will cut its taxes by only $750.

READ NEXT: What Donald Trump’s Child Care Tax Plan Means For You

We don't yet know if either candidate's child care plan will become a reality, of course. But Clinton's latest proposal is a serious effort to address the problem of rapidly rising costs. In 33 states, infant care now costs more than college tuition, according to the Care Index. That comes out to $9,589 per year on children, compared to $9,410. And America remains the only developed economy that does not guarantee paid family leave to its citizens.

Despite a divided Congress, parents now have hope that they'll receive some relief.