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H.R. 10657House119th Congress (2025-2027)In Committee

SPROUT Act of 2026

To amend the Internal Revenue Code of 1986 to allow a special depreciation allowance for qualified early childhood education centers.

Also known as Supporting Early Childhood Education Opportunities through Upfront Tax Deductions Act of 2026

Sponsored by Jeff CrankRep. Jeff Crank (R-CO)
Introduced October 1, 2026

AI-Generated Summary

Updated October 7, 2026 at 11:42 AM UTC

The SPROUT Act of 2026 changes the tax code to let owners of qualified early‑childhood education centers claim a full‑value depreciation deduction in the year the property is placed in service. This provides an upfront tax break for facilities that care for children under age five and are licensed or contracted with a licensed provider. The rule applies to qualifying properties placed in service before the end of 2031.

Key Provisions

  • Allows a 100% depreciation deduction for the adjusted basis of a qualified early‑childhood education center in the year it is placed in service, reducing the basis for future depreciation.
  • Defines a qualified center as non‑residential real property used for licensed child‑care for children under five, either owned by a licensed provider or contracted with one before construction, placed in the U.S., designated by the taxpayer, and placed in service by Dec. 31, 2031.
  • Excludes any non‑residential property that is not part of a building where child care is actually provided.
  • Permits the Treasury Secretary to extend the Dec. 31, 2031 deadline if an act of God prevents timely placement in service.
  • Amends Section 1245 to treat qualified early‑childhood education centers as Section 1245 property for depreciation purposes.
  • The new rules take effect for property placed in service after the law’s enactment.

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

October 1, 2026

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HouseIntro Referral

Introduced in House

October 1, 2026

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

October 1, 2026

Bill Text

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Introduced in HouseIssued October 1, 2026

I

119th CONGRESS

2d Session

H. R. 10657

IN THE HOUSE OF REPRESENTATIVES

October 1, 2026

Mr. Crank introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow a special depreciation allowance for qualified early childhood education centers.

1.

Short title

This Act may be cited as the Supporting Early Childhood Education Opportunities through Upfront Tax Deductions Act of 2026 or the SPROUT Act of 2026.

2.

Special depreciation allowance for qualified early childhood education centers

(a)

In general

Section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(o)

Special allowance for qualified early childhood education centers

(1)

In general

In the case of any qualified early childhood education center of a taxpayer making an election under this section—

(A)

the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to 100 percent of the adjusted basis of the qualified early childhood education center, and

(B)

the adjusted basis of the qualified early childhood education center shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.

(2)

Qualified early childhood education center

For purposes of this subsection, the term qualified early childhood education center means that portion of any nonresidential real property—

(A)

to which this section applies,

(B)

which is used by the taxpayer as part of an early childhood education center which is licensed by any State to provide care for children under the age of 5,

(C)

in the case of a taxpayer that is not licensed to provide such care, with respect to which such taxpayer is party to a written binding contract with a person licensed by any State to provide care at such early childhood education center before construction of such property begins,

(D)

which is placed in service in the United States or any possession thereof,

(E)

which is designated by the taxpayer in the election made under this section,

(F)

the original use of which commences with the taxpayer, and

(G)

which is placed in service before December 31, 2031.

(3)

Exclusion of office space, etc

The term qualified early education center shall not include any nonresidential real property which is not a part of a building in which child care is provided.

(4)

Extension of placed in service date under certain circumstances

The Secretary may extend the date under paragraph (2)(G) with respect to any property that meets the requirements of subparagraphs (A) through (F) of paragraph (1) if the Secretary determines that an act of God (as defined in section 101(1) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980) prevents the taxpayer from placing such property in service before such date.

(5)

Special rules

Rules similar to the rules of paragraphs (3), (4), (5), and (6) of subsection (n) shall apply to this subsection.

(6)

Regulations

The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance.

.

(b)

Treatment of qualified early childhood education center as section 1245 property

Section 1245(a)(3) is amended—

(1)

in subparagraph (F), by striking or,

(2)

in subparagraph (G), by striking the period and inserting , or, and

(3)

by adding at the end the following new subparagraph:

(H)

any qualified early childhood education center (as defined in section 168(o)(2))

.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.