H.R. 6979 — PLAY Act of 2026

This section modifies the child and dependent care tax credit by (1) expanding qualifying employment-related expenses to include expenses for youth physical activities (within the meaning of IRC §213(d)(12)) and exempting such expenses from the rule excluding overnight camps and similar programs, and (2) increasing the dollar limits on creditable expenses to $4,000 for one qualifying individual (from $3,000) and $7,000 for two or more qualifying individuals (from $6,000), with such limits reduced by amounts excludable from income under the dependent care assistance program (IRC §129). The changes apply to taxable years beginning after December 31, 2025.

This section increases the maximum salary reduction contribution to a dependent care flexible spending arrangement under a cafeteria plan to $10,000 per dependent (from $5,000 aggregate per family), or $12,000 per dependent for employees who are unmarried as of the beginning of the taxable year, for taxable years beginning after December 31, 2025. (Dependent care flexible spending arrangements allow employees to use pre-tax dollars for qualifying child and dependent care expenses.)

This section expands the definition of medical care under section 213(d)(1) of the Internal Revenue Code to include youth physical activities for taxpayer dependents who have attained age 4 but not age 18, up to an aggregate of $1,000 ($2,000 in the case of a joint return or head of household), for taxable years beginning after December 31, 2025. Youth physical activities include (1) membership at a qualifying fitness facility (i.e., one providing physical exercise instruction or facilities, not a private club, without golf/hunting/sailing/riding facilities, with non-incidental fitness components, and compliant with anti-discrimination laws); (2) participation or instruction in physical exercise or activity (including qualifying videos/books); and (3) related equipment, subject to limitations excluding tournament entries, private lessons/training/camps, non-exclusive use, non-specific apparel/footwear, and amounts over $250 per non-exercise sports equipment item. (As background, section 213 allows an above-the-line itemized deduction for unreimbursed medical expenses exceeding 7.5% of adjusted gross income; programs with non-exercise components are prorated, treating travel/accommodations separately.)

This section establishes a competitive grant program within the Department of Health and Human Services, to be implemented not later than one year after enactment, to award grants to eligible entities—local governments, nonprofit organizations, Tribal organizations, and veterans organizations (excluding elementary or secondary schools, local educational agencies, and institutions of higher education)—for expanding access to recreational youth sports by decreasing family participation costs and promoting healthy habits, physical activity, and socialization. Grants are for a two-year period in amounts from $5,000 to $50,000, may not fund facility construction or upgrades or competitive, elite, or selective program components (though scorekeeping is permitted), and must supplement (or, exceptionally, supplant other funds to eliminate fees) non-federal resources. The Secretary must report to Congress within three years of enactment on the program's fulfillment of its purposes, with $200 million authorized for FY2026 through FY2030.