Child care is a major expense for most families who use it, with costs that can eclipse those of higher education. As a result, families may struggle to afford child care and need to make tradeoffs with other expenses. Child care subsidies can help families with lower incomes afford child care by paying child care providers for all, or a portion of, that care. Some states, like Vermont, are making investments to provide subsidies to more families than required under federal statute.[1]
In 2023, Vermont enacted a widescale expansion of child care subsidy eligibility as part of Act 76, making more middle-income families eligible. The state also increased payment rates for child care providers; this means that more money is directed to these programs, which often have tight budgets. In total, the state has increased its investments by $125 million annually, most of which is funded by a new dedicated payroll tax.
Together, these changes aim to increase the availability and affordability of child care in Vermont while ensuring that providers can sustainably expand service—especially high-quality services. Starting in 2024, Child Trends partnered with Vermont’s Child Development Division (CDD) to explore the impacts of these policy changes on the supply of child care in the state.
Key findings from Child Trends’ study of child care subsidy policy impacts in Vermont
- From November 2023 to December 2024, the overall number of child care providers in Vermont increased by 2.4 percent.
- The decline of home-based providers has also started to reverse in Vermont, with a 3 percent increase in the number of home-based providers from September 2023 to December 2024.
- From July 2023 to December 2024, there has been a 4.8 percent increase in the proportion of all providers in Vermont who accept subsidies.
- Since October 2023, the average number of children receiving subsidies per program has increased by two.
Suggested Citation
Suggested Citation: Richards, K., Amadon, S., Banghart, P., & Tang., J. (2025). Vermont policy changes associated with increase in supply of child care. Child Trends. DOI: 10.56417/9497t530a