House narrowly passes massive spending bill, Senate is next – what it could mean for afterschool programs

This week, the budget reconciliation process[1] continued in the House of Representatives with the narrow passage of President Trump's expansive legislative proposal, the "One Big Beautiful Bill Act," on May 22, 2025. The measure passed by a mainly partisan 215–214 vote. The bill, championed by House Republican leadership and the President, includes extensions of the Tax Cut and Jobs Act (TJCA) of 2017, increased defense and border security funding, raising the debt ceiling by $4 trillion, and significant reductions to social programs such as Medicaid and SNAP. This work continues the process started earlier this year, as previewed in our previous blog.

The legislation will increase the U.S. debt by $2.3 trillion over 10 years, according to an estimate by the Congressional Budget Office (CBO) released on Tuesday. This additional government spending could have an indirect but significant impact on afterschool programs as the increased costs could add pressure to reduce annual discretionary spending. That would mean less funding for the government, including for essential supports with high returns on investment such as afterschool, community schools, informal STEM programs, and AmeriCorps.

Democrats have raised concerns about how the bill would affect different income groups. In response to their request, the Congressional Budget Office analyzed the bill’s distributional impact. The findings: lower-income households would be hit hardest, primarily due to lost social benefits, while the top 10% of earners would see financial gains from expanded tax benefits.

There are several specific provisions in the legislation that passed on Thursday morning which would have a direct impact on afterschool and summer learning programs, and the families that rely on these programs to engage and support their children and youth.

Child Tax Credit (CTC)

• Current: Families can claim up to $2,000 per child (under 17, with a Social Security number). This helps with basic needs like housing, food, and child care—including afterschool.
   
• Proposed: The credit would increase to $2,500 per child until 2029 and then drop to $2,000, adjusted for inflation.
   
• What’s New: Only families where all parents and children have a Social Security number would receive the credit, preventing legal residents with a tax ID or U.S. citizen children with either parent lacking a social security number from qualifying.
   
• Impact: About 17 million low-income families may not see any benefit increase, and 4.5 million children could lose access to the credit. According to the House Ways and Means Committee about 40 million families will benefit from the temporary $500 increase in the Child Tax Credit that is then indexed to inflation. 

Employer Tax Credit for Child Care

• Proposed: Businesses could get a bigger tax break—up to 50% of costs (capped at $600,000)—for building, operating, or contracting with child care providers.
   
• Impact: This could increase access to school-age care and afterschool programs, especially in partnership with employers, intermediaries, or local businesses.

Physical Fitness Tax Credit

• Proposed: Families could count up to $500 per person or $1,000 per couple spent on qualifying sports and fitness activities as medical expenses in tax-exempt health accounts.
   
• Impact: This could help more families afford recreational afterschool programs like sports leagues, gym memberships (e.g., YMCA), or fitness-related clubs.

Private School Scholarships (Educational Choice for Children Act)

• Proposed: This bill proposes a dollar-for-dollar federal tax credit for donations made to “Scholarship Granting Organizations” (SGOs).
   
  • Taxpayers could contribute the greater of $5,000 or 10% of their income to SGOs instead of paying that amount in federal taxes.
     
  • SGOs would then award K-12 scholarships to families with incomes up to 300% of their area’s median income.
     
  • Eligible uses include private school, public school, religious school, and homeschool tuition and costs, as well as tutors who are licensed teachers, dual enrollment, AP/college entrance exam fees, and educational supports and therapies for students with disabilities.
     
  • It would require extensive documentation for families to apply, such as notarized income verification letters.
     
• Impact: While afterschool programs are sometimes mentioned in state educational savings account laws, they are not mentioned and, therefore, would not be an allowable use. There is also a concern that this policy could potentially reduce some public school enrollments, reducing their per-pupil allocations and straining school budgets.  

Food Assistance (SNAP Cuts)

• Proposed: A $300 billion cut to SNAP (food stamps), including new work requirements for families with school-age children and raising the required work age from 55 to 65.
   
• Impact:
  • Estimates suggest up to 4 million children ages 7–17 would be at higher risk of food insecurity. The Center for Budget and Policy Priorities has a map of the impacts to total people including school-age children by state.
     
  • The proposal would also shift more responsibility for state contributions, straining state funds and potentially requiring states to cut other services to meet these new costs.
     
  • Children are directly certified for free school meals if their household participates in SNAP. The provisions that cut SNAP for some families will mean children lose access to these programs, and that they will also lose their direct connection to free or reduced-price school meals and will have to complete a school meal application. This additional paperwork would burden families and school nutrition staff, and some eligible children will fall through the cracks. The number of children eligible for free school lunch in a given community determines whether free afterschool and summer meals can be provided in that community.

Health Insurance (Medicaid Cuts)

• Proposed: A $625 billion cut to Medicaid over 10 years, potentially removing 10 million people from Medicaid or CHIP (Children’s Health Insurance Program). In the recently renegotiated language, work requirements for Medicaid which would have begun in 2029 were moved forward to the end of 2026 to advance the projected cost savings.
   
• Impact: Fewer children could be automatically enrolled in school meal programs through Medicaid direct certification pilots, weakening a critical connection between health care and nutrition support.

Non-Profit Organizations

• Proposed: Tax rates on the net investment income of foundations would increase by based on total assets, the current tax rate is 1.39% which would be tiered to increase to up to 10% for some foundations. The new tiered tax system based on total assets would mean foundations with investment income under $50 million would pay 1.39%; those with $50 million to $250 million would pay 2.8%; $250 million to $5 billion would pay 5%; and foundation with investment income more than $5 billion would incur a 10% tax rate.
   
• Impact: These changes could detract from the resources and missions of non-profit providers and reduce the ability of foundations to fund afterschool and youth programs
   
• Removed: Before passing the final version of the House bill, an amendment removed a controversial provision that would have allowed the Treasury Secretary to designate non-profits as a “Terrorist Organization” resulting in immediate loss of non-profit status and tax exemptions.

Child and Dependent Care Tax Credit (CDCTC)

• The bill did not include any provisions impacting CDCTC. The field had been asking for an expansion in this tax provision, which supports working families in affording child care but has not been updated to keep pace with inflation or provide needed benefits to lowest-income families.
   
• Impact: The Senate does have a bipartisan Child Care Availability and Affordability Act that, if included, could significantly support families, and advocates are continuing to work to include this in a final package.  

As the bill moves to the Senate, it faces substantial political challenges. While it enjoys protections afforded a reconciliation measure, meaning it only needs a simple majority to pass, it has been reported that enough Republican Senators have issues with the House measure that its passage is far from certain. It is unlikely the Senate will simply pass the House bill, which means any measure would have to go back to that chamber before landing on President Trump’s desk. Majority Leader John Thune (R-S.D.) has already started whipping the House bill and it is clear that passing the bill by the Fourth of July, which is Speaker Johnson’s goal, will be a challenge.

Now is the time to act and encourage your Senators to keep families as a key priority in the package. To take action, use our action alert.