[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2900 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 2900
To amend the Internal Revenue Code of 1986 to increase and make fully
refundable the Child and Dependent Care Tax Credit, to increase the
maximum amount excludable from gross income for employer-provided
dependent care assistance, and for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
April 10, 2025
Ms. Tenney (for herself and Mr. Schneider) introduced the following
bill; which was referred to the Committee on Ways and Means
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A BILL
To amend the Internal Revenue Code of 1986 to increase and make fully
refundable the Child and Dependent Care Tax Credit, to increase the
maximum amount excludable from gross income for employer-provided
dependent care assistance, 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 ``Promoting Affordable Childcare for
Everyone Act'' or the ``PACE Act''.
SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE TAX CREDIT.
(a) In General.--The Internal Revenue Code of 1986 is amended--
(1) by redesignating section 21 as section 36C; and
(2) by moving section 36C, as so redesignated, from subpart
A of part IV of subchapter A of chapter 1 to the location
immediately before section 37 in subpart C of part IV of
subchapter A of chapter 1.
(b) Technical Amendments.--
(1) Paragraph (1) of section 23(f) of the Internal Revenue
Code of 1986 is amended by striking ``21(e)'' and inserting
``36C(e)''.
(2) Paragraph (6) of section 35(g) of such Code is amended
by striking ``21(e)'' and inserting ``36C(e)''.
(3) Paragraph (1) of section 36C(a) of such Code (as
redesignated by subsection (a)) is amended by striking ``this
chapter'' and inserting ``this subtitle''.
(4) Subparagraph (C) of section 129(a)(2) of such Code is
amended by striking ``section 21(e)'' and inserting ``section
36C(e)''.
(5) Paragraph (2) of section 129(b) of such Code is amended
by striking ``section 21(d)(2)'' and inserting ``section
36C(d)(2)''.
(6) Paragraph (1) of section 129(e) of such Code is amended
by striking ``section 21(b)(2)'' and inserting ``section
36C(b)(2)''.
(7) Subsection (e) of section 213 of such Code is amended
by striking ``section 21'' and inserting ``section 36C''.
(8) Subparagraph (H) of section 6213(g)(2) of such Code is
amended by striking ``section 21'' and inserting ``section
36C''.
(9) Subparagraph (L) of section 6213(g)(2) of such Code is
amended by inserting ``36C,'' after ``32,''.
(10) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``36C,'' after ``36B,''.
(11) The table of sections for subpart C 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:
``Sec. 36C. Expenses for household and dependent care services
necessary for gainful employment.''.
(12) 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.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 3. ENHANCEMENT OF THE CHILD AND DEPENDENT CARE TAX CREDIT.
(a) In General.--Section 36C of the Internal Revenue Code of 1986,
as redesignated by section 2 of this Act, is amended--
(1) in paragraph (2) of subsection (a), by striking ``35
percent reduced (but not below 20 percent)'' and inserting ``50
percent reduced (but not below 35 percent)'';
(2) by striking subsection (g) and redesignating subsection
(f) as subsection (g); and
(3) by inserting after subsection (e) the following new
subsection:
``(f) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2025, each of the dollar amounts in subsections
(a)(2) and (c) 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 2024' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any increase determined under paragraph
(1) is not a multiple of $50, such increase shall be rounded to
the nearest multiple of $50.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 4. INCREASE IN EXCLUSION FOR EMPLOYER-PROVIDED DEPENDENT CARE
ASSISTANCE.
(a) In General.--Subparagraph (A) of section 129(a)(2) of the
Internal Revenue Code of 1986 (relating to dependent care assistance
programs) is amended by striking ``$5,000 ($2,500'' and inserting
``$7,500 (half such dollar amount''.
(b) Inflation Adjustment.--Paragraph (2) of section 129(a) of such
Code is amended by striking subparagraph (D) and inserting the
following new subparagraph:
``(D) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 2026,
the $7,500 amount in subparagraph (A) shall be
increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) 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 2025'
for `calendar year 2016' in subparagraph
(A)(ii) thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of $100.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
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