I
119THCONGRESS
1
STSESSION H. R. 2994
To amend the Internal Revenue Code of 1986 to enhance the Child and
Dependent Care Tax Credit and make the credit fully refundable for
certain taxpayers.
IN THE HOUSE OF REPRESENTATIVES
APRIL24, 2025
Mr. D
AVISof Illinois (for himself, Ms. DELBENE, Ms. SA´NCHEZ, Mr. BEYER,
Ms. M
OOREof Wisconsin, Ms. CHU, Ms. SEWELL, Mr. BOYLEof Penn-
sylvania, Ms. M
CCOLLUM, Ms. BROWNLEY, Mr. LARSONof Connecticut,
Ms. W
ILSONof Florida, Ms. NORTON, Mr. CLEAVER, Mr. CARSON, Mr.
K
HANNA, Mr. CONNOLLY, and Mr. PANETTA) introduced the following
bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to enhance
the Child and Dependent Care Tax Credit and make
the credit fully refundable for certain taxpayers.
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 and Dependent 4
Care Tax Credit Enhancement Act of 2025’’. 5
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SEC. 2. ENHANCEMENT OF CHILD AND DEPENDENT CARE 1
TAX CREDIT. 2
(a) I
NGENERAL.—Paragraph (2) of section 21(a) of 3
the Internal Revenue Code of 1986 is amended to read 4
as follows: 5
‘‘(2) A
PPLICABLE PERCENTAGE .— 6
‘‘(A) I
N GENERAL.—For purposes of para-7
graph (1), the term ‘applicable percentage’ 8
means 50 percent reduced (but not below the 9
phaseout percentage) by 1 percentage point for 10
each $2,000 (or fraction thereof) by which the 11
taxpayer’s adjusted gross income for the taxable 12
year exceeds $125,000. 13
‘‘(B) P
HASEOUT PERCENTAGE .—For pur-14
poses of subparagraph (A), the term ‘phaseout 15
percentage’ means 20 percent reduced (but not 16
below zero) by 1 percentage point for each 17
$2,000 (or fraction thereof) by which the tax-18
payer’s adjusted gross income for the taxable 19
year exceeds $400,000.’’. 20
(b) I
NCREASE INDOLLARLIMIT ONAMOUNTCRED-21
ITABLE.—Subsection (c) of section 21 of the Internal Rev-22
enue Code of 1986 is amended— 23
(1) in paragraph (1), by striking ‘‘$3,000’’ and 24
inserting ‘‘$8,000’’; and 25
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(2) in paragraph (2), by striking ‘‘$6,000’’ and 1
inserting ‘‘$16,000’’. 2
(c) S
PECIALRULE FORMARRIEDCOUPLESFILING 3
S
EPARATERETURNS.—Paragraph (2) of section 21(e) of 4
the Internal Revenue Code of 1986 is amended to read 5
as follows: 6
‘‘(2) M
ARRIED COUPLES FILING SEPARATE RE -7
TURNS.— 8
‘‘(A) I
N GENERAL.—In the case of married 9
individuals who do not file a joint return for the 10
taxable year— 11
‘‘(i) the applicable percentage under 12
subsection (a)(2) and the number of quali-13
fying individuals and aggregate amount ex-14
cludable under section 129 for purposes of 15
subsection (c) shall be determined with re-16
spect to each such individual as if the indi-17
vidual had filed a joint return with the in-18
dividual’s spouse, and 19
‘‘(ii) the aggregate amount of the 20
credits allowed under this section for such 21
taxable year with respect to both spouses 22
shall not exceed the amount which would 23
have been allowed under this section if the 24
individuals had filed a joint return. 25
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‘‘(B) REGULATIONS.—The Secretary shall 1
prescribe such regulations or other guidance as 2
is necessary to carry out the purposes of this 3
subsection.’’. 4
(d) A
DJUSTMENT FOR INFLATION.—Section 21 of 5
the Internal Revenue Code of 1986 is amended by adding 6
at the end the following new subsection: 7
‘‘(i) I
NFLATIONADJUSTMENT.— 8
‘‘(1) I
N GENERAL.—In the case of a calendar 9
year beginning after 2025, the $125,000 amount in 10
paragraph (2) of subsection (a) and the dollar 11
amounts in subsection (c) shall each be increased by 12
an amount equal to— 13
‘‘(A) such dollar amount, multiplied by 14
‘‘(B) the cost-of-living adjustment deter-15
mined under section 1(f)(3) for the calendar 16
year in which the taxable year begins, deter-17
mined by substituting ‘calendar year 2024’ for 18
‘calendar year 2016’ in subparagraph (A)(ii) 19
thereof. 20
‘‘(2) R
OUNDING.—If any dollar amount, after 21
being increased under paragraph (1), is not a mul-22
tiple of $100, such dollar amount shall be rounded 23
to the next lowest multiple of $100.’’. 24
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(e) CREDITMADEREFUNDABLE.—Section 21(g) of 1
the Internal Revenue Code of 1986 is amended to read 2
as follows: 3
‘‘(g) C
REDITMADEREFUNDABLE FOR CERTAININ-4
DIVIDUALS.—If the taxpayer (in the case of a joint return, 5
either spouse) has a principal place of abode in the United 6
States (determined as provided in section 32) for more 7
than one-half of the taxable year, the credit allowed under 8
subsection (a) shall be treated as a credit allowed under 9
subpart C (and not allowed under this subpart).’’. 10
(f) E
FFECTIVEDATE.—The amendments made by 11
this section shall apply to taxable years beginning after 12
December 31, 2024. 13
Æ
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