This legislation seeks to make youth physical activities more accessible and affordable for families by modifying several provisions of the Internal Revenue Code. It expands the Child and Dependent Care Tax Credit to include expenses for youth physical activities, removing previous restrictions on camp-related expenses for these activities. The bill also increases the maximum creditable amounts for this tax credit to $4,000 for one qualifying individual and $7,000 for two or more, applicable to taxable years beginning after December 31, 2025.

Furthermore, the bill raises the dollar amount for contributions to Dependent Care Flexible Spending Arrangements, allowing up to $10,000 per dependent, or $12,000 for single parents. It defines "youth physical activities" broadly to include registration costs, fees, and equipment for fitness facility memberships and physical exercise programs for dependents aged 4 to 17, with an overall annual limit of $1,000 per taxpayer ($2,000 for joint filers). However, it specifically excludes expenses for tournament entries, private lessons, training, camps, and certain types of equipment or facilities like private clubs or those focused on golf or hunting.

In addition to tax incentives, the bill establishes a new competitive grant program through the Department of Health and Human Services. This program will award grants ranging from $5,000 to $50,000 to eligible entities such as local governments, nonprofit organizations, and Tribal organizations. The grants are intended to expand access to recreational youth sports, decrease costs for families, and promote healthy habits and socialization, explicitly prohibiting funding for facility construction or elite/competitive sports programs. A total of $200,000,000 is authorized for appropriations for this grant program for fiscal years 2026 through 2030.