I
119THCONGRESS
1
STSESSION H. R. 1067
To amend the Internal Revenue Code of 1986 to establish the childcare
provider startup credit, to increase the amount of and make refundable
the expenses for household and dependent care credit, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY6, 2025
Mr. G
OTTHEIMERintroduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to establish
the childcare provider startup credit, to increase the
amount of and make refundable the expenses for house-
hold and dependent care credit, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Lowering Infant and 4
Toddler Tuition for Learning and Education Act of 2025’’ 5
or the ‘‘LITTLE Act of 2025’’. 6
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SEC. 2. CHILDCARE PROVIDER STARTUP CREDIT. 1
(a) I
NGENERAL.—Subpart D of part IV of sub-2
chapter A of chapter 1 of the Internal Revenue Code of 3
1986 is amended by adding at the end the following new 4
section: 5
‘‘SEC. 45BB. CHILDCARE PROVIDER STARTUP CREDIT. 6
‘‘(a) A
LLOWANCE OF CREDIT.—In the case of a 7
qualified taxpayer, there shall be allowed as a credit 8
against the tax imposed by this subtitle an amount equal 9
to 30 percent of the qualified childcare startup expenses 10
of the taxpayer for the taxable year. 11
‘‘(b) Q
UALIFIEDTAXPAYER.—For purposes of this 12
section, the term ‘qualified taxpayer’ means, with respect 13
to a taxable year, a taxpayer that— 14
‘‘(1) provides childcare services in compliance 15
with any applicable State or local requirements for 16
such services, and 17
‘‘(2) provided such services to 2 or more chil-18
dren for a significant portion of the taxable year. 19
‘‘(c) Q
UALIFIEDCHILDCARESTARTUPEXPENSES.— 20
For purposes of this section, the term ‘qualified childcare 21
startup expenses’ means, with respect to a taxable year, 22
a start-up expenditure (as defined in section 195(c)(1)) 23
paid or incurred during the 2-year period ending on the 24
last day of such taxable year to establish and operate a 25
childcare service. 26
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‘‘(d) LIMITATION.—The aggregate amount of credits 1
determined under subsection (a) for any taxpayer in all 2
taxable years may not exceed $10,000. 3
‘‘(e) D
ENIAL OFDOUBLEBENEFIT.—No credit shall 4
be allowed under subsection (a) for any expense for which 5
a deduction or credit is allowed under any other provision 6
of this chapter.’’. 7
(b) C
REDITALLOWEDS PART OFGENERALBUSI-8
NESSCREDIT.—Section 38(b) is amended by striking 9
‘‘plus’’ at the end of paragraph (40), by striking the period 10
at the end of paragraph (41) and inserting ‘‘, plus’’, and 11
by adding at the end the following new paragraph: 12
‘‘(42) the childcare provider startup credit de-13
termined under section 45BB(a).’’. 14
(c) C
LERICALAMENDMENT.—The table of sections 15
for subpart B of part IV of subchapter A of chapter 1 16
of the Internal Revenue Code of 1986 is amended by in-17
serting after the item relating to section 36B the following 18
new item: 19
‘‘Sec. 45BB. Childcare provider startup credit.’’.
(d) EFFECTIVEDATE.—The amendments made by 20
this section shall apply to expenses paid or incurred after 21
the date of the enactment of this Act. 22
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SEC. 3. HOUSEHOLD AND DEPENDENT CARE CREDIT IN-1
CREASED AND MADE REFUNDABLE. 2
(a) I
NGENERAL.—Subpart C of part IV of sub-3
chapter A of chapter 1 of the Internal Revenue Code of 4
1986 is amending by inserting after section 36B the fol-5
lowing new section: 6
‘‘SEC. 36C. EXPENSES FOR HOUSEHOLD AND DEPENDENT 7
CARE SERVICES NECESSARY FOR GAINFUL 8
EMPLOYMENT. 9
‘‘(a) A
LLOWANCE OFCREDIT.— 10
‘‘(1) I
N GENERAL.—In the case of an individual 11
for which there are 1 or more qualifying individuals 12
with respect to such individual, there shall be al-13
lowed as a credit against the tax imposed by this 14
chapter for the taxable year an amount equal to the 15
applicable percentage of the employment-related ex-16
penses paid by such individual during the taxable 17
year. 18
‘‘(2) A
PPLICABLE PERCENTAGE DEFINED .—For 19
purposes of paragraph (1), the term ‘applicable per-20
centage’ means 50 percent reduced (but not below 21
35 percent) by 1 percentage point for each $2,000 22
(or fraction thereof) by which the taxpayer’s ad-23
justed gross income for the taxable year exceeds 24
$15,000. 25
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‘‘(b) DEFINITIONS OFQUALIFYINGINDIVIDUAL AND 1
E
MPLOYMENT-RELATEDEXPENSES.—For purposes of 2
this section— 3
‘‘(1) Q
UALIFYING INDIVIDUAL .—The term 4
‘qualifying individual’ means— 5
‘‘(A) a dependent of the taxpayer (as de-6
fined in section 152(a)(1)) who has not attained 7
age 13, 8
‘‘(B) a dependent of the taxpayer (as de-9
fined in section 152, determined without regard 10
to subsections (b)(1), (b)(2), and (d)(1)(B)) 11
who is physically or mentally incapable of car-12
ing for himself or herself and who has the same 13
principal place of abode as the taxpayer for 14
more than one-half of such taxable year, or 15
‘‘(C) the spouse of the taxpayer, if the 16
spouse is physically or mentally incapable of 17
caring for himself or herself and who has the 18
same principal place of abode as the taxpayer 19
for more than one-half of such taxable year. 20
‘‘(2) E
MPLOYMENT-RELATED EXPENSES .— 21
‘‘(A) I
N GENERAL.—The term ‘employ-22
ment-related expenses’ means amounts paid for 23
the following expenses, but only if such ex-24
penses are incurred to enable the taxpayer to be 25
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gainfully employed for any period for which 1
there are 1 or more qualifying individuals with 2
respect to the taxpayer: 3
‘‘(i) expenses for household services, 4
and 5
‘‘(ii) expenses for the care of a quali-6
fying individual. 7
Such term shall not include any amount paid 8
for services outside the taxpayer’s household at 9
a camp where the qualifying individual stays 10
overnight. 11
‘‘(B) E
XCEPTION.—Employment-related 12
expenses described in subparagraph (A) which 13
are incurred for services outside the taxpayer’s 14
household shall be taken into account only if in-15
curred for the care of— 16
‘‘(i) a qualifying individual described 17
in paragraph (1)(A), or 18
‘‘(ii) a qualifying individual (not de-19
scribed in paragraph (1)(A)) who regularly 20
spends at least 8 hours each day in the 21
taxpayer’s household. 22
‘‘(C) D
EPENDENT CARE CENTERS .—Em-23
ployment-related expenses described in subpara-24
graph (A) which are incurred for services pro-25
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vided outside the taxpayer’s household by a de-1
pendent care center (as defined in subpara-2
graph (D)) shall be taken into account only if— 3
‘‘(i) such center complies with all ap-4
plicable laws and regulations of a State or 5
unit of local government, and 6
‘‘(ii) the requirements of subpara-7
graph (B) are met. 8
‘‘(D) D
EPENDENT CARE CENTER DE -9
FINED.—For purposes of this paragraph, the 10
term ‘dependent care center’ means any facility 11
which— 12
‘‘(i) provides care for more than six 13
individuals (other than individuals who re-14
side at the facility), and 15
‘‘(ii) receives a fee, payment, or grant 16
for providing services for any of the indi-17
viduals (regardless of whether such facility 18
is operated for profit). 19
‘‘(c) D
OLLARLIMIT ONAMOUNTCREDITABLE.—The 20
amount of the employment-related expenses incurred dur-21
ing any taxable year which may be taken into account 22
under subsection (a) shall not exceed— 23
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‘‘(1) $7,500 if there is 1 qualifying individual 1
with respect to the taxpayer for such taxable year, 2
or 3
‘‘(2) $15,000 if there are 2 or more qualifying 4
individuals with respect to the taxpayer for such tax-5
able year. 6
The amount determined under paragraph (1) or (2) 7
(whichever is applicable) shall be reduced by the aggregate 8
amount excludable from gross income under section 129 9
for the taxable year. 10
‘‘(d) E
ARNEDINCOMELIMITATION.— 11
‘‘(1) I
N GENERAL.—Except as otherwise pro-12
vided in this subsection, the amount of the employ-13
ment-related expenses incurred during any taxable 14
year which may be taken into account under sub-15
section (a) shall not exceed— 16
‘‘(A) in the case of an individual who is 17
not married at the close of such year, such indi-18
vidual’s earned income for such year, or 19
‘‘(B) in the case of an individual who is 20
married at the close of such year, the lesser of 21
such individual’s earned income or the earned 22
income of his spouse for such year. 23
‘‘(2) S
PECIAL RULE FOR SPOUSE WHO IS A 24
STUDENT OR INCAPABLE OF CARING FOR HIM -25
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SELF.—In the case of a spouse who is a student or 1
a qualifying individual described in subsection 2
(b)(1)(C), for purposes of paragraph (1), such 3
spouse shall be deemed for each month during which 4
such spouse is a full-time student at an educational 5
institution, or is such a qualifying individual, to be 6
gainfully employed and to have earned income of not 7
less than— 8
‘‘(A) $250 if subsection (c)(1) applies for 9
the taxable year, or 10
‘‘(B) $500 if subsection (c)(2) applies for 11
the taxable year. 12
‘‘(e) I
NFLATIONADJUSTMENT.— 13
‘‘(1) I
N GENERAL.—In the case of any taxable 14
year beginning after 2024, the dollar amounts in 15
this section shall be increased by an amount equal 16
to— 17
‘‘(A) such dollar amount, multiplied by 18
‘‘(B) the cost-of-living adjustment deter-19
mined under section 1(f)(3) for the calendar 20
year in which the taxable year begins, deter-21
mined by substituting ‘calendar year 2023’ for 22
‘calendar year 2016’ in subparagraph (A)(ii). 23
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‘‘(2) ROUNDING.—If any increase under para-1
graph (1) is not a multiple of $10, such increase 2
shall be rounded to the nearest multiple of $10. 3
‘‘(f) S
PECIALRULES.—For purposes of this sec-4
tion— 5
‘‘(1) P
LACE OF ABODE .—An individual shall 6
not be treated as having the same principal place of 7
abode of the taxpayer if at any time during the tax-8
able year of the taxpayer the relationship between 9
the individual and the taxpayer is in violation of 10
local law. 11
‘‘(2) M
ARRIED COUPLES MUST FILE JOINT RE -12
TURN.—If the taxpayer is married at the close of 13
the taxable year, the credit shall be allowed under 14
subsection (a) only if the taxpayer and his spouse 15
file a joint return for the taxable year. 16
‘‘(3) M
ARITAL STATUS.—An individual legally 17
separated from his spouse under a decree of divorce 18
or of separate maintenance shall not be considered 19
as married. 20
‘‘(4) C
ERTAIN MARRIED INDIVIDUALS LIVING 21
APART.—If— 22
‘‘(A) an individual who is married and who 23
files a separate return— 24
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‘‘(i) maintains as his home a house-1
hold which constitutes for more than one- 2
half of the taxable year the principal place 3
of abode of a qualifying individual, and 4
‘‘(ii) furnishes over half of the cost of 5
maintaining such household during the 6
taxable year, and 7
‘‘(B) during the last 6 months of such tax-8
able year such individual’s spouse is not a mem-9
ber of such household, 10
such individual shall not be considered as married. 11
‘‘(5) S
PECIAL DEPENDENCY TEST IN CASE OF 12
DIVORCED PARENTS, ETC.—If— 13
‘‘(A) section 152(e) applies to any child 14
with respect to any calendar year, and 15
‘‘(B) such child is under the age of 13 or 16
is physically or mentally incapable of caring for 17
himself, 18
in the case of any taxable year beginning in such 19
calendar year, such child shall be treated as a quali-20
fying individual described in subparagraph (A) or 21
(B) of subsection (b)(1) (whichever is appropriate) 22
with respect to the custodial parent (as defined in 23
section 152(e)(4)(A)), and shall not be treated as a 24
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qualifying individual with respect to the noncustodial 1
parent. 2
‘‘(6) P
AYMENTS TO RELATED INDIVIDUALS .— 3
No credit shall be allowed under subsection (a) for 4
any amount paid by the taxpayer to an individual— 5
‘‘(A) with respect to whom, for the taxable 6
year, a deduction under section 151(c) (relating 7
to deduction for personal exemptions for de-8
pendents) is allowable either to the taxpayer or 9
his spouse, or 10
‘‘(B) who is a child of the taxpayer (within 11
the meaning of section 152(f)(1)) who has not 12
attained the age of 19 at the close of the tax-13
able year. 14
For purposes of this paragraph, the term ‘taxable 15
year’ means the taxable year of the taxpayer in 16
which the service is performed. 17
‘‘(7) S
TUDENT.—The term ‘student’ means an 18
individual who during each of 5 calendar months 19
during the taxable year is a full-time student at an 20
educational organization. 21
‘‘(8) E
DUCATIONAL ORGANIZATION .—The term 22
‘educational organization’ means an educational or-23
ganization described in section 170(b)(1)(A)(ii). 24
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‘‘(9) IDENTIFYING INFORMATION REQUIRED 1
WITH RESPECT TO SERVICE PROVIDER .—No credit 2
shall be allowed under subsection (a) for any amount 3
paid to any person unless— 4
‘‘(A) the name, address, and taxpayer 5
identification number of such person are in-6
cluded on the return claiming the credit, or 7
‘‘(B) if such person is an organization de-8
scribed in section 501(c)(3) and exempt from 9
tax under section 501(a), the name and address 10
of such person are included on the return 11
claiming the credit. 12
In the case of a failure to provide the information 13
required under the preceding sentence, the preceding 14
sentence shall not apply if it is shown that the tax-15
payer exercised due diligence in attempting to pro-16
vide the information so required. 17
‘‘(10) I
DENTIFYING INFORMATION REQUIRED 18
WITH RESPECT TO QUALIFYING INDIVIDUALS .—No 19
credit shall be allowed under this section with re-20
spect to any qualifying individual unless the TIN of 21
such individual is included on the return claiming 22
the credit. 23
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‘‘(g) REGULATIONS.—The Secretary shall issue such 1
regulations or other guidance as may be necessary or ap-2
propriate to carry out the purposes of this section.’’. 3
(b) C
ONFORMINGAMENDMENTS.— 4
(1) Section 1324(b) of title 31, United States 5
Code, is amended by inserting ‘‘36C,’’ after ‘‘36B,’’. 6
(2) Subpart A of part IV of subchapter A of 7
chapter 1 of such Code is amended by repealing sec-8
tion 21 and by striking the item relating to such sec-9
tion in the table of sections for such subpart. 10
(3) Section 45F(C)(1)(A)(iv) of such Code, as 11
added by this Act, is amended by striking ‘‘section 12
21(b)(1)(A)’’ and inserting ‘‘section 36C(b)(1)(A)’’. 13
(4) The table of sections for subpart A of part 14
IV of subchapter A of chapter 1 of such Code is 15
amended by striking the item relating to section 21. 16
(5) Section 6211(b)(4)(A) of such Code is 17
amended by striking ‘‘21 by reason of subsection (g) 18
thereof,’’. 19
(6) Section 6213(g)(2) of such Code is amend-20
ed— 21
(A) in subparagraph (H), by striking ‘‘sec-22
tion 21’’ and inserting ‘‘section 36C’’, and 23
(B) in subparagraph (L)— 24
(i) by striking ‘‘21,’’, and 25
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(ii) by inserting ‘‘36C,’’ after ‘‘32,’’. 1
(7) The following sections of such Code are 2
each amended by striking ‘‘section 21(e)’’ and in-3
serting ‘‘section 36C(e)’’. 4
(A) Section 23(f)(1). 5
(B) Section 35(g)(6). 6
(C) Section 129(a)(2)(C), as amended by 7
this Act. 8
(8) Section 129 of such Code is further amend-9
ed— 10
(A) in subsection (b)(2), by striking ‘‘sec-11
tion 21(d)(2)’’ and inserting ‘‘section 12
36C(d)(2)’’, and 13
(B) in subsection (e)(1), by striking ‘‘sec-14
tion 21(b)(2)’’ and inserting ‘‘section 15
36C(b)(2)’’. 16
(9) Section 213(e) of such Code is amended by 17
striking ‘‘section 21’’ and inserting ‘‘section 36C’’. 18
(c) C
LERICALAMENDMENT.—The table of sections 19
for subpart C of part IV of subchapter A of chapter 1 20
of such Code is amended by inserting after the item relat-21
ing to section 36B the following new item: 22
‘‘Sec. 36C. Expenses for household and dependent care services necessary for
gainful employment.’’.
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(d) EFFECTIVEDATE.—The amendments made by 1
this section shall apply to taxable years beginning after 2
the date of the enactment of this section. 3
Æ
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