II 

118TH CONGRESS 

2D SESSION S. 4874 

To amend the Internal Revenue Code of 1986 to expand the employerprovided child care credit and the dependent care assistance exclusion. 

IN THE SENATE OF THE UNITED STATES 

JULY 31, 2024 

Mr. KAINE (for himself and Mrs. BRITT) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

the employer-provided child care credit and the dependent care assistance exclusion. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Child Care Availability 

5 and Affordability Act’’. 

6 SEC. 2. EXPANSION OF EMPLOYER-PROVIDED CHILD CARE 

7 CREDIT. 

8 (a) INCREASE OF AMOUNT OF QUALIFIED CHILD

9 CARE EXPENDITURES TAKEN INTO ACCOUNT.—Section 


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1 45F(a)(1) of the Internal Revenue Code of 1986 is amend2 ed by striking ‘‘25 percent’’ and inserting ‘‘50 percent’’. 

3 (b) INCREASE OF MAXIMUM CREDIT AMOUNT.—Sec4 tion 45F(b) of the Internal Revenue Code of 1986 is 

5 amended by striking ‘‘$150,000’’ and inserting 

6 ‘‘$500,000’’. 

7 (c) TREATMENT OF JOINTLY OWNED OR OPERATED

8 CHILDCARE FACILITY.—Section 45F(c)(1) of the Internal 

9 Revenue Code of 1986 is amended by adding at the end 

10 the following new subparagraph: 

11 ‘‘(C) JOINTLY OWNED OR OPERATED

12 CHILDCARE FACILITY.—For purposes of sub13 paragraph (A)(i)(I), a facility shall not fail to 

14 be treated as a qualified childcare facility of the 

15 taxpayer merely because such facility is jointly 

16 owned or operated by the taxpayer and other 

17 persons.’’. 

18 (d) SPECIAL RULE FOR SMALL BUSINESSES.—Sec19 tion 45F(e) of the Internal Revenue Code of 1986 is 

20 amended by adding at the end the following new para21 graph: 

22 ‘‘(4) SMALL BUSINESSES.— 

23 ‘‘(A) IN GENERAL.—In the case of a tax24 payer described in subparagraph (B)— 


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1 ‘‘(i) subsection (a)(1) shall be applied 

2 by substituting ‘60 percent’ for ‘50 per3 cent’, and 

4 ‘‘(ii) subsection (b) shall be applied by 

5 substituting ‘$600,000’ for ‘$500,000’. 

6 ‘‘(B) TAXPAYER DESCRIBED.—A taxpayer 

7 described in this subparagraph is a taxpayer 

8 that meets the gross receipts test of section 

9 448(c), determined— 

10 ‘‘(i) by substituting ‘5-taxable-year’ 

11 for ‘3-taxable-year’ in paragraph (1) there12 of, and 

13 ‘‘(ii) by substituting ‘5-year’ for ‘3- 

14 year’ each place such term appears in 

15 paragraph (3)(A) thereof.’’. 

16 (e) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to amounts paid or incurred after 

18 the date of the enactment of this section. 

19 SEC. 3. INCREASE IN AMOUNT EXCLUDABLE FOR DEPEND20 ENT CARE ASSISTANCE PROGRAMS. 

21 (a) IN GENERAL.—Section 129(a)(2)(A) of the Inter22 nal Revenue Code of 1986 is amended by striking ‘‘$5,000 

23 ($2,500’’ and inserting ‘‘$7,500 ($3,750’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to amounts paid or incurred after 

3 the date of the enactment of this section. 

4 SEC. 4. HOUSEHOLD AND DEPENDENT CARE CREDIT IN5 CREASED AND MADE REFUNDABLE. 

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 is amending by inserting after section 36B the fol9 lowing new section: 

10 ‘‘SEC. 36C. EXPENSES FOR HOUSEHOLD AND DEPENDENT 

11 CARE SERVICES NECESSARY FOR GAINFUL 

12 EMPLOYMENT. 

13 ‘‘(a) ALLOWANCE OF CREDIT.— 

14 ‘‘(1) IN GENERAL.—In the case of an individual 

15 for which there are 1 or more qualifying individuals 

16 with respect to such individual, there shall be al17 lowed as a credit against the tax imposed by this 

18 chapter for the taxable year an amount equal to the 

19 applicable percentage of the employment-related ex20 penses paid by such individual during the taxable 

21 year. 

22 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For 

23 purposes of paragraph (1), the term ‘applicable per24 centage’ means 50 percent— 


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1 ‘‘(A) reduced (but not below 35 percent) 

2 by 1 percentage point for each $2,000 (or frac3 tion thereof) by which the taxpayer’s adjusted 

4 gross income for the taxable year exceeds 

5 $15,000, and 

6 ‘‘(B) further reduced (but not below zero) 

7 by 1 percentage point for each $2,000 (or frac8 tion thereof) by which the taxpayer’s adjusted 

9 gross income for the taxable year exceeds 

10 $350,000. 

11 ‘‘(b) DEFINITIONS OF QUALIFYING INDIVIDUAL AND

12 EMPLOYMENT-RELATED EXPENSES.—For purposes of 

13 this section— 

14 ‘‘(1) QUALIFYING INDIVIDUAL.—The term 

15 ‘qualifying individual’ means— 

16 ‘‘(A) a dependent of the taxpayer (as de17 fined in section 152(a)(1)) who has not attained 

18 age 13, 

19 ‘‘(B) a dependent of the taxpayer (as de20 fined in section 152, determined without regard 

21 to subsections (b)(1), (b)(2), and (d)(1)(B)) 

22 who is physically or mentally incapable of car23 ing for himself or herself and who has the same 

24 principal place of abode as the taxpayer for 

25 more than one-half of such taxable year, or 


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1 ‘‘(C) the spouse of the taxpayer, if the 

2 spouse is physically or mentally incapable of 

3 caring for himself or herself and who has the 

4 same principal place of abode as the taxpayer 

5 for more than one-half of such taxable year. 

6 ‘‘(2) EMPLOYMENT-RELATED EXPENSES.— 

7 ‘‘(A) IN GENERAL.—The term ‘employ8 ment-related expenses’ means amounts paid for 

9 the following expenses, but only if such ex10 penses are incurred to enable the taxpayer to be 

11 gainfully employed for any period for which 

12 there are 1 or more qualifying individuals with 

13 respect to the taxpayer: 

14 ‘‘(i) Expenses for household services. 

15 ‘‘(ii) Expenses for the care of a quali16 fying individual. 

17 Such term shall not include any amount paid 

18 for services outside the taxpayer’s household at 

19 a camp where the qualifying individual stays 

20 overnight. 

21 ‘‘(B) EXCEPTION.—Employment-related 

22 expenses described in subparagraph (A) which 

23 are incurred for services outside the taxpayer’s 

24 household shall be taken into account only if in25 curred for the care of— 


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1 ‘‘(i) a qualifying individual described 

2 in paragraph (1)(A), or 

3 ‘‘(ii) a qualifying individual (not de4 scribed in paragraph (1)(A)) who regularly 

5 spends at least 8 hours each day in the 

6 taxpayer’s household. 

7 ‘‘(C) DEPENDENT CARE CENTERS.—Em8 ployment-related expenses described in subpara9 graph (A) which are incurred for services pro10 vided outside the taxpayer’s household by a de11 pendent care center (as defined in subpara12 graph (D)) shall be taken into account only if— 

13 ‘‘(i) such center complies with all ap14 plicable laws and regulations of a State or 

15 unit of local government, and 

16 ‘‘(ii) the requirements of subpara17 graph (B) are met. 

18 ‘‘(D) DEPENDENT CARE CENTER DE19 FINED.—For purposes of this paragraph, the 

20 term ‘dependent care center’ means any facility 

21 which— 

22 ‘‘(i) provides care for more than 6 in23 dividuals (other than individuals who re24 side at the facility), and 


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1 ‘‘(ii) receives a fee, payment, or grant 

2 for providing services for any of the indi3 viduals (regardless of whether such facility 

4 is operated for profit). 

5 ‘‘(c) DOLLAR LIMIT ON AMOUNT CREDITABLE.—The 

6 amount of the employment-related expenses incurred dur7 ing any taxable year which may be taken into account 

8 under subsection (a) shall not exceed— 

9 ‘‘(1) $5,000 if there is 1 qualifying individual 

10 with respect to the taxpayer for such taxable year, 

11 or 

12 ‘‘(2) $8,000 if there are 2 or more qualifying 

13 individuals with respect to the taxpayer for such tax14 able year. 

15 ‘‘(d) EARNED INCOME LIMITATION.— 

16 ‘‘(1) IN GENERAL.—Except as otherwise pro17 vided in this subsection, the amount of the employ18 ment-related expenses incurred during any taxable 

19 year which may be taken into account under sub20 section (a) shall not exceed— 

21 ‘‘(A) in the case of an individual who is 

22 not married at the close of such year, such indi23 vidual’s earned income for such year, or 

24 ‘‘(B) in the case of an individual who is 

25 married at the close of such year, the lesser of 


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1 such individual’s earned income or the earned 

2 income of his spouse for such year. 

3 ‘‘(2) SPECIAL RULE FOR SPOUSE WHO IS A

4 STUDENT OR INCAPABLE OF CARING FOR SELF.—In 

5 the case of a spouse who is a student or a qualifying 

6 individual described in subsection (b)(1)(C), for pur7 poses of paragraph (1), such spouse shall be deemed 

8 for each month during which such spouse is a full9 time student at an educational institution, or is such 

10 a qualifying individual, to be gainfully employed and 

11 to have earned income of not less than— 

12 ‘‘(A) $250 if subsection (c)(1) applies for 

13 the taxable year, or 

14 ‘‘(B) $500 if subsection (c)(2) applies for 

15 the taxable year. 

16 ‘‘(e) SPECIAL RULES.—For purposes of this sec17 tion— 

18 ‘‘(1) PLACE OF ABODE.—An individual shall 

19 not be treated as having the same principal place of 

20 abode of the taxpayer if at any time during the tax21 able year of the taxpayer the relationship between 

22 the individual and the taxpayer is in violation of 

23 local law. 

24 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE25 TURN.—If the taxpayer is married at the close of 


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1 the taxable year, the credit shall be allowed under 

2 subsection (a) only if the taxpayer and the tax3 payer’s spouse file a joint return for the taxable 

4 year. 

5 ‘‘(3) MARITAL STATUS.—An individual legally 

6 separated from the individual’s spouse under a de7 cree of divorce or of separate maintenance shall not 

8 be considered as married. 

9 ‘‘(4) CERTAIN MARRIED INDIVIDUALS LIVING

10 APART.—If— 

11 ‘‘(A) an individual who is married and who 

12 files a separate return— 

13 ‘‘(i) maintains as the individual’s 

14 home a household which constitutes for 

more than 1 15 ⁄2 of the taxable year the prin16 cipal place of abode of a qualifying indi17 vidual, and 

18 ‘‘(ii) furnishes over half of the cost of 

19 maintaining such household during the 

20 taxable year, and 

21 ‘‘(B) during the last 6 months of such tax22 able year such individual’s spouse is not a mem23 ber of such household, 

24 such individual shall not be considered as married. 


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1 ‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF

2 DIVORCED PARENTS, ETC.—If— 

3 ‘‘(A) section 152(e) applies to any child 

4 with respect to any calendar year, and 

5 ‘‘(B) such child is under the age of 13 or 

6 is physically or mentally incapable of caring for 

7 himself or herself, 

8 in the case of any taxable year beginning in such 

9 calendar year, such child shall be treated as a quali10 fying individual described in subparagraph (A) or 

11 (B) of subsection (b)(1) (whichever is appropriate) 

12 with respect to the custodial parent (as defined in 

13 section 152(e)(4)(A)), and shall not be treated as a 

14 qualifying individual with respect to the noncustodial 

15 parent. 

16 ‘‘(6) PAYMENTS TO RELATED INDIVIDUALS.— 

17 No credit shall be allowed under subsection (a) for 

18 any amount paid by the taxpayer to an individual— 

19 ‘‘(A) with respect to whom, for the taxable 

20 year, a deduction under section 151(c) (relating 

21 to deduction for personal exemptions for de22 pendents) is allowable either to the taxpayer or 

23 the taxpayer’s spouse, or 

24 ‘‘(B) who is a child of the taxpayer (within 

25 the meaning of section 152(f)(1)) who has not 


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1 attained the age of 19 at the close of the tax2 able year. 

3 For purposes of this paragraph, the term ‘taxable 

4 year’ means the taxable year of the taxpayer in 

5 which the service is performed. 

6 ‘‘(7) STUDENT.—The term ‘student’ means an 

7 individual who during each of 5 calendar months 

8 during the taxable year is a full-time student at an 

9 educational organization. 

10 ‘‘(8) EDUCATIONAL ORGANIZATION.—The term 

11 ‘educational organization’ means an educational or12 ganization described in section 170(b)(1)(A)(ii). 

13 ‘‘(9) IDENTIFYING INFORMATION REQUIRED

14 WITH RESPECT TO SERVICE PROVIDER.—No credit 

15 shall be allowed under subsection (a) for any amount 

16 paid to any person unless— 

17 ‘‘(A) the name, address, and taxpayer 

18 identification number of such person are in19 cluded on the return claiming the credit, or 

20 ‘‘(B) if such person is an organization de21 scribed in section 501(c)(3) and exempt from 

22 tax under section 501(a), the name and address 

23 of such person are included on the return 

24 claiming the credit. 


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1 In the case of a failure to provide the information 

2 required under the preceding sentence, the preceding 

3 sentence shall not apply if it is shown that the tax4 payer exercised due diligence in attempting to pro5 vide the information so required. 

6 ‘‘(10) IDENTIFYING INFORMATION REQUIRED

7 WITH RESPECT TO QUALIFYING INDIVIDUALS.—No 

8 credit shall be allowed under this section with re9 spect to any qualifying individual unless the TIN of 

10 such individual is included on the return claiming 

11 the credit. 

12 ‘‘(f) REGULATIONS.—The Secretary shall issue such 

13 regulations or other guidance as may be necessary or ap14 propriate to carry out the purposes of this section.’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Section 1324(b) of title 31 is amended by 

17 inserting ‘‘36C,’’ after ‘‘36B,’’. 

18 (2) Section 21 of the Internal Revenue Code of 

19 1986 is repealed. 

20 (3) The table of sections for subpart A of part 

21 IV of subchapter A of chapter 1 of such Code is 

22 amended by striking the item relating to section 21. 

23 (4) Section 6211(b)(4)(A) of such Code is 

24 amended by striking ‘‘21 by reason of subsection (g) 

25 thereof,’’. 


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1 (5) Section 6213(g)(2) of such Code is amend2 ed— 

3 (A) in subparagraph (H), by striking ‘‘sec4 tion 21’’ and inserting ‘‘section 36C’’, and 

5 (B) in subparagraph (L)— 

6 (i) by striking ‘‘21,’’, and 

7 (ii) by inserting ‘‘36C,’’ after ‘‘32,’’. 

8 (6) The following sections of such Code are 

9 each amended by striking ‘‘section 21(e)’’ and in10 serting ‘‘section 36C(e)’’. 

11 (A) Section 23(f)(1). 

12 (B) Section 35(g)(6). 

13 (C) Section 129(a)(2)(C). 

14 (7) Section 129 of such Code is further amend15 ed— 

16 (A) in subsection (b)(2), by striking ‘‘sec17 tion 21(d)(2)’’ and inserting ‘‘section 

18 36C(d)(2)’’, and 

19 (B) in subsection (e)(1), by striking ‘‘sec20 tion 21(b)(2)’’ and inserting ‘‘section 

21 36C(b)(2)’’. 

22 (8) Section 213(e) of such Code is amended by 

23 striking ‘‘section 21’’ and inserting ‘‘section 36C’’. 

24 (c) CLERICAL AMENDMENT.—The table of sections 

25 for subpart C of part IV of subchapter A of chapter 1 


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1 of such Code is amended by inserting after the item relat2 ing to section 36B the following new item: 

‘‘Sec. 36C. Expenses for household and dependent care services necessary for 

gainful employment.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this section. 

Æ 


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