[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1067 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
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
February 6, 2025
Mr. Gottheimer 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 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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Lowering Infant and Toddler Tuition
for Learning and Education Act of 2025'' or the ``LITTLE Act of 2025''.
SEC. 2. CHILDCARE PROVIDER STARTUP CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45BB. CHILDCARE PROVIDER STARTUP CREDIT.
``(a) Allowance of Credit.--In the case of a qualified taxpayer,
there shall be allowed as a credit against the tax imposed by this
subtitle an amount equal to 30 percent of the qualified childcare
startup expenses of the taxpayer for the taxable year.
``(b) Qualified Taxpayer.--For purposes of this section, the term
`qualified taxpayer' means, with respect to a taxable year, a taxpayer
that--
``(1) provides childcare services in compliance with any
applicable State or local requirements for such services, and
``(2) provided such services to 2 or more children for a
significant portion of the taxable year.
``(c) Qualified Childcare Startup Expenses.--For purposes of this
section, the term `qualified childcare startup expenses' means, with
respect to a taxable year, a start-up expenditure (as defined in
section 195(c)(1)) paid or incurred during the 2-year period ending on
the last day of such taxable year to establish and operate a childcare
service.
``(d) Limitation.--The aggregate amount of credits determined under
subsection (a) for any taxpayer in all taxable years may not exceed
$10,000.
``(e) Denial of Double Benefit.--No credit shall be allowed under
subsection (a) for any expense for which a deduction or credit is
allowed under any other provision of this chapter.''.
(b) Credit Allowed S Part of General Business Credit.--Section
38(b) is amended by striking ``plus'' at the end of paragraph (40), by
striking the period at the end of paragraph (41) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(42) the childcare provider startup credit determined
under section 45BB(a).''.
(c) Clerical Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 36B the
following new item:
``Sec. 45BB. Childcare provider startup credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to expenses paid or incurred after the date of the enactment of
this Act.
SEC. 3. HOUSEHOLD AND DEPENDENT CARE CREDIT INCREASED AND MADE
REFUNDABLE.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amending by inserting after
section 36B the following new section:
``SEC. 36C. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES
NECESSARY FOR GAINFUL EMPLOYMENT.
``(a) Allowance of Credit.--
``(1) In general.--In the case of an individual for which
there are 1 or more qualifying individuals with respect to such
individual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount equal to
the applicable percentage of the employment-related expenses
paid by such individual during the taxable year.
``(2) Applicable percentage defined.--For purposes of
paragraph (1), the term `applicable percentage' means 50
percent reduced (but not below 35 percent) by 1 percentage
point for each $2,000 (or fraction thereof) by which the
taxpayer's adjusted gross income for the taxable year exceeds
$15,000.
``(b) Definitions of Qualifying Individual and Employment-Related
Expenses.--For purposes of this section--
``(1) Qualifying individual.--The term `qualifying
individual' means--
``(A) a dependent of the taxpayer (as defined in
section 152(a)(1)) who has not attained age 13,
``(B) a dependent of the taxpayer (as defined in
section 152, determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B)) who is physically or
mentally incapable of caring for himself or herself and
who has the same principal place of abode as the
taxpayer for more than one-half of such taxable year,
or
``(C) the spouse of the taxpayer, if the spouse is
physically or mentally incapable of caring for himself
or herself and who has the same principal place of
abode as the taxpayer for more than one-half of such
taxable year.
``(2) Employment-related expenses.--
``(A) In general.--The term `employment-related
expenses' means amounts paid for the following
expenses, but only if such expenses are incurred to
enable the taxpayer to be gainfully employed for any
period for which there are 1 or more qualifying
individuals with respect to the taxpayer:
``(i) expenses for household services, and
``(ii) expenses for the care of a
qualifying individual.
Such term shall not include any amount paid for
services outside the taxpayer's household at a camp
where the qualifying individual stays overnight.
``(B) Exception.--Employment-related expenses
described in subparagraph (A) which are incurred for
services outside the taxpayer's household shall be
taken into account only if incurred for the care of--
``(i) a qualifying individual described in
paragraph (1)(A), or
``(ii) a qualifying individual (not
described in paragraph (1)(A)) who regularly
spends at least 8 hours each day in the
taxpayer's household.
``(C) Dependent care centers.--Employment-related
expenses described in subparagraph (A) which are
incurred for services provided outside the taxpayer's
household by a dependent care center (as defined in
subparagraph (D)) shall be taken into account only if--
``(i) such center complies with all
applicable laws and regulations of a State or
unit of local government, and
``(ii) the requirements of subparagraph (B)
are met.
``(D) Dependent care center defined.--For purposes
of this paragraph, the term `dependent care center'
means any facility which--
``(i) provides care for more than six
individuals (other than individuals who reside
at the facility), and
``(ii) receives a fee, payment, or grant
for providing services for any of the
individuals (regardless of whether such
facility is operated for profit).
``(c) Dollar Limit on Amount Creditable.--The amount of the
employment-related expenses incurred during any taxable year which may
be taken into account under subsection (a) shall not exceed--
``(1) $7,500 if there is 1 qualifying individual with
respect to the taxpayer for such taxable year, or
``(2) $15,000 if there are 2 or more qualifying individuals
with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is
applicable) shall be reduced by the aggregate amount excludable from
gross income under section 129 for the taxable year.
``(d) Earned Income Limitation.--
``(1) In general.--Except as otherwise provided in this
subsection, the amount of the employment-related expenses
incurred during any taxable year which may be taken into
account under subsection (a) shall not exceed--
``(A) in the case of an individual who is not
married at the close of such year, such individual's
earned income for such year, or
``(B) in the case of an individual who is married
at the close of such year, the lesser of such
individual's earned income or the earned income of his
spouse for such year.
``(2) Special rule for spouse who is a student or incapable
of caring for himself.--In the case of a spouse who is a
student or a qualifying individual described in subsection
(b)(1)(C), for purposes of paragraph (1), such spouse shall be
deemed for each month during which such spouse is a full-time
student at an educational institution, or is such a qualifying
individual, to be gainfully employed and to have earned income
of not less than--
``(A) $250 if subsection (c)(1) applies for the
taxable year, or
``(B) $500 if subsection (c)(2) applies for the
taxable year.
``(e) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2024, the dollar amounts in this section shall
be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2023' for `calendar year 2016' in
subparagraph (A)(ii).
``(2) Rounding.--If any increase under paragraph (1) is not
a multiple of $10, such increase shall be rounded to the
nearest multiple of $10.
``(f) Special Rules.--For purposes of this section--
``(1) Place of abode.--An individual shall not be treated
as having the same principal place of abode of the taxpayer if
at any time during the taxable year of the taxpayer the
relationship between the individual and the taxpayer is in
violation of local law.
``(2) Married couples must file joint return.--If the
taxpayer is married at the close of the taxable year, the
credit shall be allowed under subsection (a) only if the
taxpayer and his spouse file a joint return for the taxable
year.
``(3) Marital status.--An individual legally separated from
his spouse under a decree of divorce or of separate maintenance
shall not be considered as married.
``(4) Certain married individuals living apart.--If--
``(A) an individual who is married and who files a
separate return--
``(i) maintains as his home a household
which constitutes for more than one-half of the
taxable year the principal place of abode of a
qualifying individual, and
``(ii) furnishes over half of the cost of
maintaining such household during the taxable
year, and
``(B) during the last 6 months of such taxable year
such individual's spouse is not a member of such
household,
such individual shall not be considered as married.
``(5) Special dependency test in case of divorced parents,
etc.--If--
``(A) section 152(e) applies to any child with
respect to any calendar year, and
``(B) such child is under the age of 13 or is
physically or mentally incapable of caring for himself,
in the case of any taxable year beginning in such calendar
year, such child shall be treated as a qualifying individual
described in subparagraph (A) or (B) of subsection (b)(1)
(whichever is appropriate) with respect to the custodial parent
(as defined in section 152(e)(4)(A)), and shall not be treated
as a qualifying individual with respect to the noncustodial
parent.
``(6) Payments to related individuals.--No credit shall be
allowed under subsection (a) for any amount paid by the
taxpayer to an individual--
``(A) with respect to whom, for the taxable year, a
deduction under section 151(c) (relating to deduction
for personal exemptions for dependents) is allowable
either to the taxpayer or his spouse, or
``(B) who is a child of the taxpayer (within the
meaning of section 152(f)(1)) who has not attained the
age of 19 at the close of the taxable year.
For purposes of this paragraph, the term `taxable year' means
the taxable year of the taxpayer in which the service is
performed.
``(7) Student.--The term `student' means an individual who
during each of 5 calendar months during the taxable year is a
full-time student at an educational organization.
``(8) Educational organization.--The term `educational
organization' means an educational organization described in
section 170(b)(1)(A)(ii).
``(9) Identifying information required with respect to
service provider.--No credit shall be allowed under subsection
(a) for any amount paid to any person unless--
``(A) the name, address, and taxpayer
identification number of such person are included on
the return claiming the credit, or
``(B) if such person is an organization described
in section 501(c)(3) and exempt from tax under section
501(a), the name and address of such person are
included on the return claiming the credit.
In the case of a failure to provide the information required
under the preceding sentence, the preceding sentence shall not
apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information so required.
``(10) Identifying information required with respect to
qualifying individuals.--No credit shall be allowed under this
section with respect to any qualifying individual unless the
TIN of such individual is included on the return claiming the
credit.
``(g) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section.''.
(b) Conforming Amendments.--
(1) Section 1324(b) of title 31, United States Code, is
amended by inserting ``36C,'' after ``36B,''.
(2) Subpart A of part IV of subchapter A of chapter 1 of
such Code is amended by repealing section 21 and by striking
the item relating to such section in the table of sections for
such subpart.
(3) Section 45F(C)(1)(A)(iv) of such Code, as added by this
Act, is amended by striking ``section 21(b)(1)(A)'' and
inserting ``section 36C(b)(1)(A)''.
(4) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by striking
the item relating to section 21.
(5) Section 6211(b)(4)(A) of such Code is amended by
striking ``21 by reason of subsection (g) thereof,''.
(6) Section 6213(g)(2) of such Code is amended--
(A) in subparagraph (H), by striking ``section 21''
and inserting ``section 36C'', and
(B) in subparagraph (L)--
(i) by striking ``21,'', and
(ii) by inserting ``36C,'' after ``32,''.
(7) The following sections of such Code are each amended by
striking ``section 21(e)'' and inserting ``section 36C(e)''.
(A) Section 23(f)(1).
(B) Section 35(g)(6).
(C) Section 129(a)(2)(C), as amended by this Act.
(8) Section 129 of such Code is further amended--
(A) in subsection (b)(2), by striking ``section
21(d)(2)'' and inserting ``section 36C(d)(2)'', and
(B) in subsection (e)(1), by striking ``section
21(b)(2)'' and inserting ``section 36C(b)(2)''.
(9) Section 213(e) of such Code is amended by striking
``section 21'' and inserting ``section 36C''.
(c) Clerical Amendment.--The table of sections for subpart C of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 36B the following new
item:
``Sec. 36C. Expenses for household and dependent care services
necessary for gainful employment.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this section.
<all>