To amend the Internal Revenue Code of 1986 to increase the amount allowed as a credit under the expenses for household and dependent care services credit and the employer-provided child care credit.
This bill would markedly expand two federal tax credits intended to help with child and dependent care costs. First, it doubles the qualifying expense caps for the expenses-for-household-and-dependent-care credit (Section 21), raising the per-year cap from $3,000 to $6,000 for one qualifying person and from $6,000 to $12,000 for two or more qualifying persons. Second, it increases the employer-provided child care credit (Section 45F) the same year, increasing the cap on qualified expenditures from $150,000 to $400,000. The amendments would apply to taxable years beginning after enactment. The intent is to make care more affordable for families and to encourage employers to offer childcare benefits, but they would reduce federal revenue unless offsets are provided.
Key Points
- 1Section 21(c) increases the expenses cap for the child/dependent care credit:
- 2- One qualifying person: $3,000 → $6,000
- 3- Two or more qualifying persons: $6,000 → $12,000
- 4The credit amount is a percentage of qualifying care expenses; raising these caps allows higher credits for families with greater care costs.
- 5Section 45F(b) raises the employer-provided child care credit cap from $150,000 to $400,000 of qualified expenditures.
- 6Effective date: Changes apply to taxable years beginning after enactment.
- 7Overall effect: Expected to expand the value of these credits for eligible taxpayers and employers, potentially encouraging work participation and childcare availability, but with an impact on federal revenue (no offsets are specified in the text).