I
119THCONGRESS
1
STSESSION H. R. 1827
To amend the Internal Revenue Code of 1986 to expand the employer-
provided child care credit and the dependent care assistance exclusion.
IN THE HOUSE OF REPRESENTATIVES
MARCH4, 2025
Mr. C
ARBAJAL(for himself, Mr. LAWLER, Ms. DAVIDSof Kansas, and Mr.
C
ISCOMANI) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to expand
the employer-provided child care credit and the depend-
ent care assistance exclusion.
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 ‘‘Child Care Availability 4
and Affordability Act’’. 5
SEC. 2. EXPANSION OF EMPLOYER-PROVIDED CHILD CARE 6
CREDIT. 7
(a) I
NCREASE OF AMOUNT OF QUALIFIEDCHILD 8
C
AREEXPENDITURESTAKENINTOACCOUNT.—Section 9
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45F(a)(1) of the Internal Revenue Code of 1986 is amend-1
ed by striking ‘‘25 percent’’ and inserting ‘‘50 percent’’. 2
(b) I
NCREASE OFMAXIMUMCREDITAMOUNT.—Sec-3
tion 45F(b) of the Internal Revenue Code of 1986 is 4
amended by striking ‘‘$150,000’’ and inserting 5
‘‘$500,000’’. 6
(c) T
REATMENT OFJOINTLYOWNED OROPERATED 7
C
HILDCAREFACILITY.—Section 45F(c)(1) of the Internal 8
Revenue Code of 1986 is amended by adding at the end 9
the following new subparagraph: 10
‘‘(C) J
OINTLY OWNED OR OPERATED 11
CHILDCARE FACILITY.—For purposes of sub-12
paragraph (A)(i)(I), a facility shall not fail to 13
be treated as a qualified childcare facility of the 14
taxpayer merely because such facility is jointly 15
owned or operated by the taxpayer and other 16
persons.’’. 17
(d) S
PECIALRULE FORSMALLBUSINESSES.—Sec-18
tion 45F(e) of the Internal Revenue Code of 1986 is 19
amended by adding at the end the following new para-20
graph: 21
‘‘(4) S
MALL BUSINESSES.— 22
‘‘(A) I
N GENERAL.—In the case of a tax-23
payer described in subparagraph (B)— 24
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‘‘(i) subsection (a)(1) shall be applied 1
by substituting ‘60 percent’ for ‘50 per-2
cent’, and 3
‘‘(ii) subsection (b) shall be applied by 4
substituting ‘$600,000’ for ‘$500,000’. 5
‘‘(B) T
AXPAYER DESCRIBED .—A taxpayer 6
described in this subparagraph is a taxpayer 7
that meets the gross receipts test of section 8
448(c), determined— 9
‘‘(i) by substituting ‘5-taxable-year’ 10
for ‘3-taxable-year’ in paragraph (1) there-11
of, and 12
‘‘(ii) by substituting ‘5-year’ for ‘3- 13
year’ each place such term appears in 14
paragraph (3)(A) thereof.’’. 15
(e) E
FFECTIVEDATE.—The amendments made by 16
this section shall apply to amounts paid or incurred after 17
the date of the enactment of this section. 18
SEC. 3. INCREASE IN AMOUNT EXCLUDABLE FOR DEPEND-19
ENT CARE ASSISTANCE PROGRAMS. 20
(a) I
NGENERAL.—Section 129(a)(2)(A) of the Inter-21
nal Revenue Code of 1986 is amended by striking ‘‘$5,000 22
($2,500’’ and inserting ‘‘$7,500 ($3,750’’. 23
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(b) EFFECTIVEDATE.—The amendment made by 1
this section shall apply to amounts paid or incurred after 2
the date of the enactment of this section. 3
SEC. 4. HOUSEHOLD AND DEPENDENT CARE CREDIT IN-4
CREASED AND MADE REFUNDABLE. 5
(a) I
NGENERAL.—Subpart C of part IV of sub-6
chapter A of chapter 1 of the Internal Revenue Code of 7
1986 is amending by inserting after section 36B the fol-8
lowing new section: 9
‘‘SEC. 36C. EXPENSES FOR HOUSEHOLD AND DEPENDENT 10
CARE SERVICES NECESSARY FOR GAINFUL 11
EMPLOYMENT. 12
‘‘(a) A
LLOWANCE OFCREDIT.— 13
‘‘(1) I
N GENERAL.—In the case of an individual 14
for which there are 1 or more qualifying individuals 15
with respect to such individual, there shall be al-16
lowed as a credit against the tax imposed by this 17
chapter for the taxable year an amount equal to the 18
applicable percentage of the employment-related ex-19
penses paid by such individual during the taxable 20
year. 21
‘‘(2) A
PPLICABLE PERCENTAGE DEFINED .—For 22
purposes of paragraph (1), the term ‘applicable per-23
centage’ means 50 percent— 24
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‘‘(A) reduced (but not below 35 percent) 1
by 1 percentage point for each $2,000 (or frac-2
tion thereof) by which the taxpayer’s adjusted 3
gross income for the taxable year exceeds 4
$15,000, and 5
‘‘(B) further reduced (but not below zero) 6
by 1 percentage point for each $2,000 (or frac-7
tion thereof) by which the taxpayer’s adjusted 8
gross income for the taxable year exceeds 9
$150,000. 10
‘‘(b) D
EFINITIONS OFQUALIFYINGINDIVIDUAL AND 11
E
MPLOYMENT-RELATEDEXPENSES.—For purposes of 12
this section— 13
‘‘(1) Q
UALIFYING INDIVIDUAL .—The term 14
‘qualifying individual’ means— 15
‘‘(A) a dependent of the taxpayer (as de-16
fined in section 152(a)(1)) who has not attained 17
age 13, 18
‘‘(B) a dependent of the taxpayer (as de-19
fined in section 152, determined without regard 20
to subsections (b)(1), (b)(2), and (d)(1)(B)) 21
who is physically or mentally incapable of car-22
ing for himself or herself and who has the same 23
principal place of abode as the taxpayer for 24
more than one-half of such taxable year, or 25
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‘‘(C) the spouse of the taxpayer, if the 1
spouse is physically or mentally incapable of 2
caring for himself or herself and who has the 3
same principal place of abode as the taxpayer 4
for more than one-half of such taxable year. 5
‘‘(2) E
MPLOYMENT-RELATED EXPENSES .— 6
‘‘(A) I
N GENERAL.—The term ‘employ-7
ment-related expenses’ means amounts paid for 8
the following expenses, but only if such ex-9
penses are incurred to enable the taxpayer to be 10
gainfully employed for any period for which 11
there are 1 or more qualifying individuals with 12
respect to the taxpayer: 13
‘‘(i) Expenses for household services. 14
‘‘(ii) Expenses for the care of a quali-15
fying individual. 16
Such term shall not include any amount paid 17
for services outside the taxpayer’s household at 18
a camp where the qualifying individual stays 19
overnight. 20
‘‘(B) E
XCEPTION.—Employment-related 21
expenses described in subparagraph (A) which 22
are incurred for services outside the taxpayer’s 23
household shall be taken into account only if in-24
curred for the care of— 25
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‘‘(i) a qualifying individual described 1
in paragraph (1)(A), or 2
‘‘(ii) a qualifying individual (not de-3
scribed in paragraph (1)(A)) who regularly 4
spends at least 8 hours each day in the 5
taxpayer’s household. 6
‘‘(C) D
EPENDENT CARE CENTERS .—Em-7
ployment-related expenses described in subpara-8
graph (A) which are incurred for services pro-9
vided outside the taxpayer’s household by a de-10
pendent care center (as defined in subpara-11
graph (D)) shall be taken into account only if— 12
‘‘(i) such center complies with all ap-13
plicable laws and regulations of a State or 14
unit of local government, and 15
‘‘(ii) the requirements of subpara-16
graph (B) are met. 17
‘‘(D) D
EPENDENT CARE CENTER DE -18
FINED.—For purposes of this paragraph, the 19
term ‘dependent care center’ means any facility 20
which— 21
‘‘(i) provides care for more than 6 in-22
dividuals (other than individuals who re-23
side at the facility), and 24
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‘‘(ii) receives a fee, payment, or grant 1
for providing services for any of the indi-2
viduals (regardless of whether such facility 3
is operated for profit). 4
‘‘(c) D
OLLARLIMIT ONAMOUNTCREDITABLE.—The 5
amount of the employment-related expenses incurred dur-6
ing any taxable year which may be taken into account 7
under subsection (a) shall not exceed— 8
‘‘(1) $5,000 if there is 1 qualifying individual 9
with respect to the taxpayer for such taxable year, 10
or 11
‘‘(2) $8,000 if there are 2 or more qualifying 12
individuals with respect to the taxpayer for such tax-13
able year. 14
‘‘(d) E
ARNEDINCOMELIMITATION.— 15
‘‘(1) I
N GENERAL.—Except as otherwise pro-16
vided in this subsection, the amount of the employ-17
ment-related expenses incurred during any taxable 18
year which may be taken into account under sub-19
section (a) shall not exceed— 20
‘‘(A) in the case of an individual who is 21
not married at the close of such year, such indi-22
vidual’s earned income for such year, or 23
‘‘(B) in the case of an individual who is 24
married at the close of such year, the lesser of 25
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such individual’s earned income or the earned 1
income of his spouse for such year. 2
‘‘(2) S
PECIAL RULE FOR SPOUSE WHO IS A 3
STUDENT OR INCAPABLE OF CARING FOR SELF .—In 4
the case of a spouse who is a student or a qualifying 5
individual described in subsection (b)(1)(C), for pur-6
poses of paragraph (1), such spouse shall be deemed 7
for each month during which such spouse is a full- 8
time student at an educational institution, or is such 9
a qualifying individual, to be gainfully employed and 10
to have earned income of not less than— 11
‘‘(A) $250 if subsection (c)(1) applies for 12
the taxable year, or 13
‘‘(B) $500 if subsection (c)(2) applies for 14
the taxable year. 15
‘‘(e) S
PECIALRULES.—For purposes of this sec-16
tion— 17
‘‘(1) P
LACE OF ABODE .—An individual shall 18
not be treated as having the same principal place of 19
abode of the taxpayer if at any time during the tax-20
able year of the taxpayer the relationship between 21
the individual and the taxpayer is in violation of 22
local law. 23
‘‘(2) M
ARRIED COUPLES MUST FILE JOINT RE -24
TURN.—If the taxpayer is married at the close of 25
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the taxable year, the credit shall be allowed under 1
subsection (a) only if the taxpayer and the tax-2
payer’s spouse file a joint return for the taxable 3
year. 4
‘‘(3) M
ARITAL STATUS.—An individual legally 5
separated from the individual’s spouse under a de-6
cree of divorce or of separate maintenance shall not 7
be considered as married. 8
‘‘(4) C
ERTAIN MARRIED INDIVIDUALS LIVING 9
APART.—If— 10
‘‘(A) an individual who is married and who 11
files a separate return— 12
‘‘(i) maintains as the individual’s 13
home a household which constitutes for 14
more than
1
⁄2of the taxable year the prin-15
cipal place of abode of a qualifying indi-16
vidual, and 17
‘‘(ii) furnishes over half of the cost of 18
maintaining such household during the 19
taxable year, and 20
‘‘(B) during the last 6 months of such tax-21
able year such individual’s spouse is not a mem-22
ber of such household, 23
such individual shall not be considered as married. 24
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‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF 1
DIVORCED PARENTS, ETC.—If— 2
‘‘(A) section 152(e) applies to any child 3
with respect to any calendar year, and 4
‘‘(B) such child is under the age of 13 or 5
is physically or mentally incapable of caring for 6
himself or herself, 7
in the case of any taxable year beginning in such 8
calendar year, such child shall be treated as a quali-9
fying individual described in subparagraph (A) or 10
(B) of subsection (b)(1) (whichever is appropriate) 11
with respect to the custodial parent (as defined in 12
section 152(e)(4)(A)), and shall not be treated as a 13
qualifying individual with respect to the noncustodial 14
parent. 15
‘‘(6) P
AYMENTS TO RELATED INDIVIDUALS .— 16
No credit shall be allowed under subsection (a) for 17
any amount paid by the taxpayer to an individual— 18
‘‘(A) with respect to whom, for the taxable 19
year, a deduction under section 151(c) (relating 20
to deduction for personal exemptions for de-21
pendents) is allowable either to the taxpayer or 22
the taxpayer’s spouse, or 23
‘‘(B) who is a child of the taxpayer (within 24
the meaning of section 152(f)(1)) who has not 25
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attained the age of 19 at the close of the tax-1
able year. 2
For purposes of this paragraph, the term ‘taxable 3
year’ means the taxable year of the taxpayer in 4
which the service is performed. 5
‘‘(7) S
TUDENT.—The term ‘student’ means an 6
individual who during each of 5 calendar months 7
during the taxable year is a full-time student at an 8
educational organization. 9
‘‘(8) E
DUCATIONAL ORGANIZATION .—The term 10
‘educational organization’ means an educational or-11
ganization described in section 170(b)(1)(A)(ii). 12
‘‘(9) I
DENTIFYING INFORMATION REQUIRED 13
WITH RESPECT TO SERVICE PROVIDER .—No credit 14
shall be allowed under subsection (a) for any amount 15
paid to any person unless— 16
‘‘(A) the name, address, and taxpayer 17
identification number of such person are in-18
cluded on the return claiming the credit, or 19
‘‘(B) if such person is an organization de-20
scribed in section 501(c)(3) and exempt from 21
tax under section 501(a), the name and address 22
of such person are included on the return 23
claiming the credit. 24
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In the case of a failure to provide the information 1
required under the preceding sentence, the preceding 2
sentence shall not apply if it is shown that the tax-3
payer exercised due diligence in attempting to pro-4
vide the information so required. 5
‘‘(10) I
DENTIFYING INFORMATION REQUIRED 6
WITH RESPECT TO QUALIFYING INDIVIDUALS .—No 7
credit shall be allowed under this section with re-8
spect to any qualifying individual unless the TIN of 9
such individual is included on the return claiming 10
the credit. 11
‘‘(f) R
EGULATIONS.—The Secretary shall issue such 12
regulations or other guidance as may be necessary or ap-13
propriate to carry out the purposes of this section.’’. 14
(b) C
ONFORMINGAMENDMENTS.— 15
(1) Section 1324(b) of title 31 is amended by 16
inserting ‘‘36C,’’ after ‘‘36B,’’. 17
(2) Section 21 of the Internal Revenue Code of 18
1986 is repealed. 19
(3) The table of sections for subpart A of part 20
IV of subchapter A of chapter 1 of such Code is 21
amended by striking the item relating to section 21. 22
(4) Section 6211(b)(4)(A) of such Code is 23
amended by striking ‘‘21 by reason of subsection (g) 24
thereof,’’. 25
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(5) Section 6213(g)(2) of such Code is amend-1
ed— 2
(A) in subparagraph (H), by striking ‘‘sec-3
tion 21’’ and inserting ‘‘section 36C’’, and 4
(B) in subparagraph (L)— 5
(i) by striking ‘‘21,’’, and 6
(ii) by inserting ‘‘36C,’’ after ‘‘32,’’. 7
(6) The following sections of such Code are 8
each amended by striking ‘‘section 21(e)’’ and in-9
serting ‘‘section 36C(e)’’. 10
(A) Section 23(f)(1). 11
(B) Section 35(g)(6). 12
(C) Section 129(a)(2)(C). 13
(7) Section 129 of such Code is further amend-14
ed— 15
(A) in subsection (b)(2), by striking ‘‘sec-16
tion 21(d)(2)’’ and inserting ‘‘section 17
36C(d)(2)’’, and 18
(B) in subsection (e)(1), by striking ‘‘sec-19
tion 21(b)(2)’’ and inserting ‘‘section 20
36C(b)(2)’’. 21
(8) Section 213(e) of such Code is amended by 22
striking ‘‘section 21’’ and inserting ‘‘section 36C’’. 23
(c) C
LERICALAMENDMENT.—The table of sections 24
for subpart C of part IV of subchapter A of chapter 1 25
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of such Code is amended by inserting after the item relat-1
ing to section 36B the following new item: 2
‘‘Sec. 36C. Expenses for household and dependent care services necessary for
gainful employment.’’.
(d) EFFECTIVEDATE.—The amendments made by 3
this section shall apply to taxable years beginning after 4
the date of the enactment of this section. 5
Æ
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