119-hr2900

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2900 Introduced in House

    (IH) ]

<DOC>

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.

_______________________________________________________________________

 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

_______________________________________________________________________

 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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