“To amend the Internal Revenue Code of 1986 to expand the employer-provided child care credit and the dependent care assistance exclusion.”
No CRS summary available for this bill.
This section expands the employer-provided child care credit by (1) increasing the percentage of qualified child care expenditures taken into account to 50% (from 25%), (2) increasing the maximum annual credit to $500,000 (from $150,000), and (3) treating a jointly owned or operated facility as a qualified child care facility of the taxpayer. It further provides enhanced rates for small businesses meeting a modified gross receipts test (i.e., average annual gross receipts of not more than $30 million over the prior 5 taxable years, with other adjustments): 60% of expenditures (instead of 50%) and a maximum credit of $600,000 (instead of $500,000). The amendments apply to amounts paid or incurred after enactment.
This section increases the amount excludable from gross income for employer-provided dependent care assistance (i.e., payments for child or dependent care to enable the employee to work) to $7,500 ($3,750 if married filing separately) (from $5,000 ($2,500)) for amounts paid or incurred after enactment.
This section establishes a new refundable tax credit (IRC §36C) for employment-related expenses necessary for a taxpayer's gainful employment, including household services and care for qualifying individuals (i.e., dependents under age 13; physically or mentally incapable dependents or spouses who reside with the taxpayer more than half the year). The credit equals 50% of such expenses (phased down by 1 percentage point for each $2,000 or fraction thereof of adjusted gross income over $15,000, but not below 35%; further phased down by 1 percentage point for each $2,000 or fraction thereof over $150,000, but not below zero), with expenses capped at $5,000 for one qualifying individual ($8,000 for two or more) and limited to the taxpayer's earned income (or lesser of taxpayer's or spouse's earned income, if married; with special deemed earned income rules of $250/$500 monthly for a student or disabled spouse). (As background, this credit parallels the existing nonrefundable child and dependent care credit under IRC §21 but makes it refundable; increases maximum expenses to $5,000/$8,000 (from $3,000/$6,000); raises the maximum rate to 50% (from 35%) with phase-down to 35% (from 20%) through higher AGI thresholds; and adds an upper phaseout to zero above $150,000.)