119-hr1067

[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.
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