A bill to amend the Internal Revenue Code of 1986 to expand the child tax credit.

Summary: Child Tax Credit Expansion and Equity Act - Amends the Internal Revenue Code to provide a phased-in increase ($1,000 as of 2006) of the child tax credit. Makes such credit partially refundable. Provides for coordination with Federal means-tested programs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Child Tax Credit Expansion and 
Equity Act''.

SEC. 2. EXPANSION OF CHILD TAX CREDIT; CREDIT MADE PARTIALLY 
              REFUNDABLE.

    (a) Increase in Amount Allowed.--Subsection (a) of section 24 of 
the Internal Revenue Code of 1986 (relating to allowance of credit) is 
amended to read as follows:
    ``(a) Allowance of Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year 
        with respect to each qualifying child of the taxpayer an amount 
        equal to the applicable amount.
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount shall be determined as follows:

``In the case of any taxable year   The applicable amount is--
        beginning in--
    2002..........................................                $600 
    2003..........................................                 700 
    2004..........................................                 800 
    2005..........................................                 900 
    2006 or thereafter............................            1,000.''.
    (b) Credit Allowed Against Alternative Minimum Tax.--
            (1) In general.--Section 24(b) of the Internal Revenue Code 
        of 1986 (relating to limitation based on adjusted gross income) 
        is amended by adding at the end the following new paragraph:
            ``(3) Limitation based on amount of tax.--The credit 
        allowed under subsection (a) for any taxable year shall not 
        exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                subpart (other than this section) and section 27 for 
                the taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 24(d) of such Code is amended--
                            (i) by striking ``section 26(a)'' each 
                        place it appears and inserting ``subsection 
                        (b)(3)'', and
                            (ii) in paragraph (1)(B) by striking 
                        ``aggregate amount of credits allowed by this 
                        subpart'' and inserting ``amount of credit 
                        allowed by this section''.
                    (B) Paragraph (1) of section 26(a) of such Code is 
                amended by inserting ``(other than section 24)'' after 
                ``this subpart''.
                    (C) Section 904(h) is amended by inserting ``(other 
                than section 24)'' after ``chapter''.
                    (D) Section 1397E(c)(2) of such Code is amended by 
                inserting ``section 24 and'' after ``other than''.
                    (E) The heading for section 24(b) of such Code is 
                amended to read as follows: ``Limitations.--''.
                    (F) The heading for section 24(b)(1) of such Code 
                is amended to read as follows: ``Limitation based on 
                adjusted gross income.--''.
    (c) Portion of Child Credit Treated as Refundable.--
            (1) In general.--Paragraph (1) of section 24(d) of the 
        Internal Revenue Code of 1986 (relating to additional credit 
        for families with 3 or more children), as amended by subsection 
        (b)(2)(A), is amended to read as follows:
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the sum of the 
        credits allowable under this section for all qualifying 
        children of the taxpayer (determined without regard to this 
        subsection and the limitation under subsection (b)(3)), except 
        that the amount of the credit which may be taken into account 
        under this subsection with respect to any qualifying child 
        shall not exceed $500. The amount of the credit allowed under 
        this subsection shall not be treated as a credit allowed under 
        this subpart and shall reduce the amount of credit otherwise 
        allowable under subsection (a) without regard to subsection 
        (b)(3).''.
            (2) Conforming amendments.--
                    (A) Section 24(d) of such Code is amended by 
                striking paragraph (3).
                    (B) The heading for section 24(d) of such Code is 
                amended to read as follows: ``Additional Credit for 
                Certain Families.--''.
    (d) Coordination With Federal Means-Tested Programs.--Section 24(d) 
of the Internal Revenue Code of 1986, as amended by subsection (c), is 
amended by adding at the end the following new paragraph:
            ``(3) Coordination with means-tested programs.--For 
        purposes of any benefits, assistance, or supportive services 
        under any Federal program or under any State or local program 
        financed, in whole or in part, with Federal funds, which 
        imposes income limitations on eligibility for such program, any 
        refund made to an individual (or the spouse of an individual) 
        by reason of this subsection shall not be treated as income 
        (and shall not be taken into account in determining resources 
        for the month of its receipt and the following month).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.