“A bill 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 (Section 45F) as follows: (1) increases the percentage of qualified child care expenditures taken into account to 50% (from 25%); (2) increases the maximum annual credit to $500,000 (from $150,000); and (3) provides that a jointly owned or operated facility is treated as a qualified child care facility of the taxpayer. The section further establishes enhanced rates for small businesses meeting a modified gross receipts test of section 448(c) using a 5-year average (instead of 3 years)—specifically, 60% of expenditures (instead of 50%) up to $600,000 (instead of $500,000). The amendments apply to amounts paid or incurred after the date of enactment.
This section increases the amount excludable from gross income under employer-sponsored dependent care assistance programs to $7,500 ($3,750 for married individuals 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 gainful employment with respect to one or more qualifying individuals (i.e., a dependent under age 13; a physically or mentally incapable dependent or spouse living with the taxpayer for more than half the year)—thus making refundable the existing nonrefundable credit under IRC §21. The credit equals 50% of such expenses up to $5,000 for one qualifying individual or $8,000 for two or more ($3,000/$6,000 under current law), with the percentage phased down by 1 point for each $2,000 (or fraction thereof) of adjusted gross income over $15,000 to a floor of 35% and further phased down to 0% for adjusted gross income over $150,000 (current law phases down from 35% to 20% with no further reduction). The credit amount is further limited to the taxpayer's earned income (or lesser of spouses' earned income if married), with special rules deeming a student or incapable spouse to have at least $250/$500 of monthly earned income; married taxpayers must file jointly.