A $1/hour raise can eliminate $10,000+ in childcare subsidies overnight

The CCDBG subsidy cliff means a family earning just above 85% of state median income loses their entire childcare subsidy with no taper -- a raise of $2,000/year in wages can trigger a loss of $10,000+ in annual childcare assistance. Parents rationally turn down promotions and raises to stay below the threshold, trapping them in lower-earning positions indefinitely. This cliff exists because federal law caps eligibility at 85% of state median income with no mandatory phase-out schedule, and most states set their cutoffs even lower. The result is a poverty trap where the families most motivated to climb out of low-income brackets are penalized the hardest for doing so.