To amend the Internal Revenue Code of 1986 to establish a tax credit for small businesses to provide diaper changing stations in restrooms.
H.R. 5440 creates a new tax credit, the Diaper Changing Station Restroom Credit, to encourage small businesses to install diaper changing stations and related restroom improvements. For each business location, eligible small businesses can claim a credit equal to 70% of qualified restroom-related expenses (stations, dispensers, and installation/renovation to meet the requirements). The credit is capped per location at up to $10,000 minus any credits claimed in the prior three years for that same location. Eligible small businesses are those with gross receipts not exceeding $5 million or with fewer than 100 full-time equivalent employees, with aggregation rules to treat related entities as a single unit. A key requirement is the “family bathroom” rule: at least one public restroom at the location must be accessible to both men and women and include a diaper changing station (free) and a diaper dispenser (which may charge). The credit is integrated into the General Business Credit and applies to taxable years beginning after December 31, 2025 (i.e., starting in 2026). The bill also disallows double benefits by reducing the basis of properties and preventing deductions or credits for expenses that were credited.
Key Points
- 170% credit: Eligible small businesses may claim 70% of qualified diaper changing station restroom expenses paid or incurred at a business location, including installation and labor costs, for restrooms that meet the requirements.
- 2Per-location cap: The credit for a given business location cannot exceed $10,000 minus the aggregate credits claimed for that location in the prior 3 tax years.
- 3Eligibility and aggregation: “Eligible small business” means entities with gross receipts ≤ $5 million or with fewer than 100 full-time equivalent employees, with aggregation rules treating related entities as a single taxpayer for purposes of these thresholds.
- 4Family bathroom requirement: At the location, both men and women must have access to at least one public restroom equipped with a diaper changing station (free) and a diaper dispenser (which may impose a charge).
- 5Tax treatment and effective date: The credit is added to the General Business Credit (as a new section 45BB) and applies to tax years beginning after 12/31/2025, with standard anti-double-benefit rules (no double deduction/credit and basis reduction where applicable).