II 

109TH CONGRESS 

1ST SESSION S. 1305 

To amend the Internal Revenue Code of 1986 to increase tax benefits for 

parents with children, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 23, 2005 

Mr. BROWNBACK 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 increase 

tax benefits for parents with children, and for other 

purposes.

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 ‘‘Parents’ Tax Relief 

5 Act of 2005’’. 

6 SEC. 2. MINIMUM DEPENDENT CARE CREDIT FOR PARENTS 

7 CARING FOR CHILDREN AT HOME. 

8 (a) IN GENERAL.—Subsection (e) of section 21 of the 

9 Internal Revenue Code of 1986 (relating to special rules) 
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1 is amended by adding at the end the following new para2 graph: 

3 ‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY4 AT-HOME PARENTS.—In the case of any taxpayer 

5 with one or more qualifying individuals described in 

6 subparagraph (A) of subsection (b)(1) under the age 

7 of 6 at any time during the taxable year, such tax8 payer shall be deemed to have employment-related 

9 expenses with respect to each such qualifying indi10 vidual and earned income in an amount equal to the 

11 greater of— 

12 ‘‘(A) the amount of employment-related ex13 penses incurred for such qualifying individuals 

14 for the taxable year (determined under this sec15 tion without regard to this paragraph), or 

16 ‘‘(B) $250 for each month beginning in 

17 such taxable year with respect to which such 

18 qualifying individual has not attained age 6 as 

19 of the beginning of such month.’’. 

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

21 this section shall apply to taxable years beginning after 

22 December 31, 2004. 
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1 SEC. 3. INCREASE IN PERSONAL EXEMPTION AMOUNT. 

2 (a) IN GENERAL.—Paragraph (1) of section 151(d) 

3 of the Internal Revenue Code of 1986 is amended by strik4 ing ‘‘$2,000’’ and inserting ‘‘$5,000’’. 

5 (b) INFLATION ADJUSTMENT.—Subparagraph (A) of 

6 section 151(d)(4) of such Code is amended— 

7 (1) by striking ‘‘1989’’ and inserting ‘‘2005’’, 

8 and 

9 (2) by striking ‘‘1988’’ in clause (ii) and insert10 ing ‘‘2004’’. 

11 (c) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 December 31, 2004. 

14 SEC. 4. ELIMINATION OF MARRIAGE PENALTY IN ALL RATE 

15 BRACKETS. 

16 (a) IN GENERAL.—Paragraph (8) of section 1(f) of 

17 the Internal Revenue Code of 1986 (relating to phaseout 

18 of marriage penalty in 15-percent bracket) is amended to 

19 read as follows: 

20 ‘‘(8) ELIMINATION OF MARRIAGE PENALTY.—

21 With respect to taxable years beginning after De22 cember 31, 2004, in prescribing the tables under 

23 paragraph (1)— 

24 ‘‘(A) the minimum and maximum amounts 

25 of taxable income in each rate bracket in the 

26 table contained in subsection (a) shall be 200 
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1 percent of the minimum and maximum amounts 

2 of taxable income in the corresponding rate 

3 bracket in the table contained in subsection (c) 

4 (after any other adjustment under this sub5 section), and 

6 ‘‘(B) the comparable taxable income 

7 amounts in the table contained in subsection 

(d) shall be 1 8 ⁄2 of the amounts determined 

9 under subparagraph (A).’’. 

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

11 this section apply to taxable years beginning after Decem12 ber 31, 2004. 

13 SEC. 5. STANDARD DEDUCTION FOR BUSINESS USE OF 

14 HOME. 

15 (a) IN GENERAL.—Subsection (c) of section 280A of 

16 the Internal Revenue Code of 1986 (relating to disallow17 ance of certain expenses in connection with business use 

18 of home, rental of vacation homes, etc.) is amended by 

19 adding at the end the following new paragraph: 

20 ‘‘(7) STANDARD HOME OFFICE DEDUCTION.— 

21 ‘‘(A) IN GENERAL.—In the case of an indi22 vidual that is allowed a deduction for the use of 

23 a home office because of a use described in 

24 paragraphs (1), (2), or (4) of this subsection, 

25 notwithstanding the limitations of paragraph 
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1 (5), such individual may elect to use the stand2 ard home office deduction for the taxable year. 

3 ‘‘(B) STANDARD HOME OFFICE DEDUC4 TION AMOUNT.—For purposes of this para5 graph, the standard home office deduction is 

6 the lesser of— 

7 ‘‘(i) $2,500, or 

8 ‘‘(ii) the gross income derived from 

9 the individual’s trade or business for which 

10 such use occurs.’’. 

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

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 6. INCREASE AND OTHER MODIFICATIONS IN CHILD 

15 TAX CREDIT MADE PERMANENT. 

16 (a) IN GENERAL.—Title IX of the Economic Growth 

17 and Tax Relief Reconciliation Act of 2001 shall not apply 

18 to the amendments made by section 201 of such Act (re19 lating to modifications to child tax credit). 

20 (b) CREDIT AMOUNT ADJUSTED FOR INFLATION.—

21 Section 24 of the Internal Revenue Code of 1986 is 

22 amended by adding at the end the following new sub23 section: 

24 ‘‘(g) INFLATION ADJUSTMENT.—In the case of any 

25 taxable year beginning in a calendar year after 2005, the 
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1 $1,000 amount contained in subsection (a) shall be in2 creased by an amount equal to— 

3 ‘‘(1) such dollar amount, multiplied by 

4 ‘‘(2) the cost-of-living adjustment determined 

5 under section 1(f)(3) for the calendar year in which 

6 the taxable year begins, determined by substituting 

7 ‘calendar year 2004’ for ‘calendar year 1992’ in sub8 paragraph (B) thereof. 

9 Any increase determined under the preceding sentence 

10 shall be rounded to the nearest multiple of $50.’’. 

11 SEC. 7. TELECOMMUTING TAX CREDIT. 

12 (a) IN GENERAL.—Subpart D of part IV of sub13 chapter A of chapter 1 of the Internal Revenue Code of 

14 1986 (relating to business related credits) is amended by 

15 adding at the end the following new section: 

16 ‘‘SEC. 45J. TELECOMMUTING CREDIT. 

17 ‘‘(a) DETERMINATION OF AMOUNT.—For purposes of 

18 section 38, the amount of the telecommuting credit deter19 mined under this section for the taxable year shall be 

20 equal to 40 percent of the qualified first-year wages for 

21 such year. 

22 ‘‘(b) QUALIFIED FIRST-YEAR WAGES.—For purposes 

23 of this section— 

24 ‘‘(1) IN GENERAL.—The term ‘qualified first25 year wages’ means, with respect to any individual, 
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1 qualified wages attributable to service rendered dur2 ing the 1-year period beginning with the day the in3 dividual begins work for the employer. 

4 ‘‘(2) QUALIFIED WAGES.—The term ‘qualified 

5 wages’ means the wages paid or incurred by the em6 ployer during the taxable year to qualified telecom7 muters. 

8 ‘‘(3) ONLY FIRST $6,000 OF WAGES PER YEAR

9 TAKEN INTO ACCOUNT.—The amount of the quali10 fied first-year wages which may be taken into ac11 count with respect to any individual shall not exceed 

12 $6,000 per year. 

13 ‘‘(c) QUALIFIED TELECOMMUTER.—For purposes of 

14 this section, the term ‘qualified telecommuter’ means any 

15 individual who renders not less than 40 percent of the 

16 service described in subsection (b)(2) from the individual’s 

17 principal residence. 

18 ‘‘(d) WAGES.—For purposes of this section— 

19 ‘‘(1) IN GENERAL.—The term ‘wages’ has the 

20 meaning given to such term by subsection (b) of sec21 tion 3306 (determined without regard to any dollar 

22 limitation contained in such section). 

23 ‘‘(2) ON-THE-JOB TRAINING AND WORK SUP24 PLEMENTATION PAYMENTS.— 
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1 ‘‘(A) EXCLUSION FOR EMPLOYERS RECEIV2 ING ON-THE-JOB TRAINING PAYMENTS.—The 

3 term ‘wages’ shall not include any amounts 

4 paid or incurred by an employer for any period 

5 to any individual for whom the employer re6 ceives federally funded payments for on-the-job 

7 training of such individual for such period. 

8 ‘‘(B) REDUCTION FOR WORK SUPPLEMEN9 TATION PAYMENTS TO EMPLOYERS.—The 

10 amount of wages which would (but for this sub11 paragraph) be qualified wages under this sec12 tion for an employer with respect to an indi13 vidual for a taxable year shall be reduced by an 

14 amount equal to the amount of the payments 

15 made to such employer (however utilized by 

16 such employer) with respect to such individual 

17 for such taxable year under a program estab18 lished under section 482(e) of the Social Secu19 rity Act. 

20 ‘‘(e) SPECIAL RULES.—For purposes of this section, 

21 rules similar to the rules of section 52 and subsections 

22 (f), (g), (i), (j), and (k) of section 51 shall apply.’’. 

23 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec24 tion 38(b) of such Code is amended by striking ‘‘plus’’ 

25 at the end of paragraph (18), by striking the period at 
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1 the end of paragraph (19) and inserting ‘‘, plus’’, and by 

2 adding at the end the following new paragraph: 

3 ‘‘(20) the telecommuting credit determined 

4 under section 45J(a).’’. 

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

6 for subpart D of part IV of subchapter A of chapter 1 

7 of such Code is amended by adding at the end the fol8 lowing new item:

‘‘Sec. 45J. Telecommuting credit.’’.

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

10 this section shall apply to taxable year beginning after De11 cember 31, 2004. 

12 SEC. 8. EMPLOYER-PROVIDED COMPUTER EQUIPMENT 

13 TREATED AS FRINGE BENEFIT. 

14 (a) IN GENERAL.—Subsection (a) of section 132 of 

15 the Internal Revenue Code of 1986 is amended by striking 

16 ‘‘or’’ at the end of paragraph (7), by striking the period 

17 at the end of paragraph (8) and inserting ‘‘, or’’, and by 

18 adding at the end the following new paragraph: 

19 ‘‘(9) qualified employer-provided computer 

20 equipment fringe.’’. 

21 (b) QUALIFIED EMPLOYER-PROVIDED COMPUTER

22 EQUIPMENT FRINGE.—Section 132 of such Code is 

23 amended by adding at the end the following new sub24 section: 
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1 ‘‘(o) QUALIFIED EMPLOYER-PROVIDED COMPUTER

2 EQUIPMENT FRINGE.—For purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified em4 ployer-provided computer equipment fringe’ means 

5 any computer and related equipment and services 

6 provided to an employee by an employer if— 

7 ‘‘(A) such computer and related equipment 

8 and services are necessary for the employee to 

9 perform work for the employer from the em10 ployee’s home, and 

11 ‘‘(B) the employee makes substantial busi12 ness use of the equipment in the performance 

13 of work for the employer. 

14 ‘‘(2) SUBSTANTIAL USE.—For purposes of 

15 paragraph (1), the term ‘substantial business use’ 

16 includes standby use for periods when work from 

17 home may be required by the employer such as dur18 ing work closures caused by the threat of terrorism, 

19 inclement weather, or natural disasters.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2004. 
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1 SEC. 9. INCREASED BENEFITS FOR INDIVIDUALS PRE2 CLUDED FROM PERFORMING REMUNERA3 TIVE WORK BY NEED TO PROVIDE CHILD 

4 CARE. 

5 Title II of the Social Security Act (42 U.S.C. 401 

6 et seq.) is amended by adding at the end the following 

7 new section: 

8 ‘‘INCREASED BENEFITS FOR INDIVIDUALS PRECLUDED

9 FROM PERFORMING REMUNERATIVE WORK BY NEED

10 TO PROVIDE CHILD CARE

11 ‘‘SEC. 235. (a) GENERAL RULE.—For purposes of 

12 determining entitlement to and the amount of any monthly 

13 benefit or lump-sum death payment payable under this 

14 title on the basis of the wages and self-employment income 

15 of any individual, and for purposes of section 216(i)(3), 

16 if such individual— 

17 ‘‘(1) is not otherwise credited under this title, 

18 for one or more of such individual’s elapsed years 

19 (referred to in section 215(b)(3)), with wages at 

20 least equal to the national average wage index (as 

21 defined in section 209(k)) for such year, and 

22 ‘‘(2) is a qualified individual in connection with 

23 any such elapsed year after 2005, 

24 then such individual shall be credited under this title for 

25 such year after 2005 with additional wages in an amount 

26 necessary to increase the total wages credited to such indi-
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1 vidual under this title for such year to an amount equal 

2 to the national average wage index (as so defined) for such 

3 year. 

4 ‘‘(b) QUALIFIED INDIVIDUAL.—For purposes of this 

5 section, the term ‘qualified individual’ means, in connec6 tion with any year, any individual in any case in which— 

7 ‘‘(1) such individual is married for a period 

8 during such year of not less than 90 days, 

9 ‘‘(2) throughout such period during such year, 

10 such individual and such individual’s spouse live 

11 with a qualified child, and 

12 ‘‘(3) more than 50 percent of the total remu13 neration of such individual and such individual’s 

14 spouse for such year which is attributable to wages 

15 or self-employment income earned or derived during 

16 the period during such year for which the require17 ments of paragraphs (1) and (2) are met consists of 

18 wages or self-employment income earned or derived 

19 away from home by such spouse. 

20 ‘‘(c) QUALIFIED CHILD.—For purposes of this sec21 tion, the term ‘qualified child’ means, in connection with 

22 a qualified individual, a child of such individual (or such 

23 individual’s spouse referred to in subsection (b)(2)) who— 

24 ‘‘(1) is less than 6 years of age, or 
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1 ‘‘(2) is less than 10 years of age, is under a dis2 ability, and is unable to attend school. 

3 ‘‘(d) LIMITATION TO 10 ELAPSED YEARS.—In any 

4 case in which the requirements of subsection (a) are met 

5 in connection with more than 10 elapsed years of an indi6 vidual, subsection (a) shall apply only with respect to those 

7 elapsed years, not in excess of 10, which, when taken into 

8 account in the application of subsection (a), result in the 

9 highest primary insurance amount for such individual, 

10 taking into account which years would be excluded from 

11 benefit computation years under section 215(b)(2)(B)(i). 

12 ‘‘(e) PROTECTION OF TRUST FUND BALANCES.—

13 There are authorized to be appropriated to each of the 

14 Trust Funds, consisting of the Federal Old-Age and Sur15 vivors Insurance Trust Fund, the Federal Disability In16 surance Trust Fund, and the Federal Hospital Insurance 

17 Trust Fund, for transfer on July 1 of each calendar year 

18 after 2005 to such Trust Fund from amounts in the gen19 eral fund in the Treasury not otherwise appropriated, an 

20 amount equal to the total of the additional amounts which 

21 would be appropriated to such Trust Fund for the fiscal 

22 year ending September 30 of such calendar year under 

23 section 201 or 1817 of this Act if the amounts of the addi24 tional wages credited for such calendar year by reason of 

25 subsection (a) constituted remuneration for employment 
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1 (as defined in section 3121(b) of the Internal Revenue 

2 Code of 1986) for purposes of the taxes imposed by sec3 tions 3101 and 3111 of the Internal Revenue Code of 

4 1986. Amounts authorized to be appropriated under this 

5 subsection for transfer on July 1 of each calendar year 

6 shall be determined on the basis of estimates of the Com7 missioner of Social Security of the wages required to be 

8 credited for such calendar year under subsection (a); and 

9 proper adjustments shall be made in amounts authorized 

10 to be appropriated for subsequent transfer to the extent 

11 prior estimates were in excess of or were less than such 

12 wages so credited.’’.

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