I 

117TH CONGRESS 

1ST SESSION H. R. 258 

To amend the Internal Revenue Code of 1986 to provide a tax credit for 

expenses for household and elder care services necessary for gainful 

employment. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 11, 2021 

Ms. LEE of California 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 provide 

a tax credit for expenses for household and elder care 

services necessary for gainful employment. 

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

3 SECTION 1. EXPENSES FOR HOUSEHOLD AND ELDER CARE 

4 SERVICES NECESSARY FOR GAINFUL EM5 PLOYMENT. 

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

8 1986 is amended by adding at the end the following new 

9 section: 


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1 ‘‘SEC. 25E. EXPENSES FOR HOUSEHOLD AND ELDER CARE 

2 SERVICES NECESSARY FOR GAINFUL EM3 PLOYMENT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.— 

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

6 for which there are one or more qualifying individ7 uals (as defined in subsection (b)(1)) with respect to 

8 such individual, there shall be allowed as a credit 

9 against the tax imposed by this chapter for the tax10 able year an amount equal to the applicable percent11 age of the employment-related expenses (as defined 

12 in subsection (b)(2)) paid by such individual during 

13 the taxable year. 

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

15 purposes of paragraph (1), the term ‘applicable per16 centage’ means 35 percent reduced (but not below 

17 20 percent) by 1 percentage point for each $2,000 

18 (or fraction thereof) by which the taxpayer’s ad19 justed gross income for the taxable year exceeds 

20 $15,000. 

21 ‘‘(b) DEFINITIONS OF QUALIFYING INDIVIDUAL AND

22 EMPLOYMENT-RELATED EXPENSES.—For purposes of 

23 this section— 

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

25 ‘qualifying individual’ means an individual who— 

26 ‘‘(A) has attained age 50, and 


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1 ‘‘(B) is one of the following: 

2 ‘‘(i) An individual who bears a rela3 tionship to the taxpayer described in sub4 paragraph (C) or (D) of section 152(d)(2) 

5 (relating to fathers, mothers, and ances6 tors). 

7 ‘‘(ii) An individual would be a depend8 ent of the taxpayer (as defined in section 

9 152, determined without regard to sub10 sections (b)(1) and (b)(2)) as a qualifying 

11 relative described in section 152(d)(1) if— 

12 ‘‘(I) in lieu of subparagraphs (B) 

13 and (C) thereof the following applied 

14 with respect to the individual: 

15 ‘‘(aa) the taxpayer has pro16 vided over one-half of the individ17 ual’s support for the calendar 

18 year in which such taxable year 

19 begins and each of the preceding 

20 4 taxable years, and 

21 ‘‘(bb) the individual’s modi22 fied adjusted gross income for 

23 the calendar year in which such 

24 taxable year begins is less than 


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1 the exemption amount (as de2 fined in section 151(d)), 

3 ‘‘(II) the individual is physically 

4 or mentally incapable of caring for 

5 himself or herself, and 

6 ‘‘(III) the individual who has the 

7 same principal place of abode as the 

8 taxpayer for more than one-half of 

9 such taxable year. 

10 ‘‘(iii) The spouse of the taxpayer who 

11 is physically or mentally incapable of car12 ing for himself or herself. 

13 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.— 

14 The term ‘modified adjusted gross income’ means 

15 adjusted gross income determined without regard to 

16 section 86. 

17 ‘‘(3) EMPLOYMENT-RELATED EXPENSES.— 

18 ‘‘(A) IN GENERAL.—The term ‘employ19 ment-related expenses’ means amounts paid for 

20 the following expenses, but only if such ex21 penses are incurred to enable the taxpayer to be 

22 gainfully employed for any period for which 

23 there are one or more qualifying individuals 

24 with respect to the taxpayer: 


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1 ‘‘(i) expenses for household services, 

2 and 

3 ‘‘(ii) expenses for the care of a quali4 fying individual, including expenses for res5 pite care and hospice care. 

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

7 expenses described in subparagraph (A) which 

8 are incurred for services outside the taxpayer’s 

9 household shall be taken into account only if in10 curred for the care of— 

11 ‘‘(i) a qualifying individual described 

12 in paragraph (1)(A), or 

13 ‘‘(ii) a qualifying individual (not de14 scribed in paragraph (1)(A)) who regularly 

15 spends at least 8 hours each day in the 

16 taxpayer’s household. 

17 ‘‘(C) DEPENDENT CARE CENTERS.—Em18 ployment-related expenses described in subpara19 graph (A) which are incurred for services pro20 vided outside the taxpayer’s household by a de21 pendent care center (as defined in subpara22 graph (D)) shall be taken into account only if— 

23 ‘‘(i) such center complies with all ap24 plicable laws and regulations of a State or 

25 unit of local government, and 


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1 ‘‘(ii) the requirements of subpara2 graph (B) are met. 

3 ‘‘(D) DEPENDENT CARE CENTER DE4 FINED.—For purposes of this paragraph, the 

5 term ‘dependent care center’ means any facility 

6 which— 

7 ‘‘(i) provides care for more than six 

8 individuals (other than individuals who re9 side at the facility), and 

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

11 for providing services for any of the indi12 viduals (regardless of whether such facility 

13 is operated for profit). 

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

15 amount of the employment-related expenses incurred dur16 ing any taxable year which may be taken into account 

17 under subsection (a) shall not exceed— 

18 ‘‘(1) $3,000 if there is 1 qualifying individual 

19 with respect to the taxpayer for such taxable year, 

20 or 

21 ‘‘(2) $6,000 if there are two or more qualifying 

22 individuals with respect to the taxpayer for such tax23 able year. 

24 The amount determined under paragraph (1) or (2) 

25 (whichever is applicable) shall be reduced by the aggregate 


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1 amount excludable from gross income under section 129 

2 for the taxable year. 

3 ‘‘(d) EARNED INCOME LIMITATION.—Except as oth4 erwise provided in this subsection, the amount of the em5 ployment-related expenses incurred during any taxable 

6 year which may be taken into account under subsection 

7 (a) shall not exceed— 

8 ‘‘(1) in the case of an individual who is not 

9 married at the close of such year, such individual’s 

10 earned income for such year, or 

11 ‘‘(2) in the case of an individual who is married 

12 at the close of such year, the lesser of such individ13 ual’s earned income or the earned income of his 

14 spouse for such year. 

15 ‘‘(e) SPECIAL RULES.—For purposes of this sec16 tion— 

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

18 not be treated as having the same principal place of 

19 abode of the taxpayer if at any time during the tax20 able year of the taxpayer the relationship between 

21 the individual and the taxpayer is in violation of 

22 local law. 

23 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE24 TURN.—If the taxpayer is married at the close of 

25 the taxable year, the credit shall be allowed under 


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1 subsection (a) only if the taxpayer and his spouse 

2 file a joint return for the taxable year. 

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

4 separated from his spouse under a decree of divorce 

5 or of separate maintenance shall not be considered 

6 as married. 

7 ‘‘(4) CERTAIN MARRIED INDIVIDUALS LIVING

8 APART.—If— 

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

10 files a separate return— 

11 ‘‘(i) maintains as his home a house12 hold which constitutes for more than one13 half of the taxable year the principal place 

14 of abode of a qualifying individual, and 

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

16 maintaining such household during the 

17 taxable year, and 

18 ‘‘(B) during the last 6 months of such tax19 able year such individual’s spouse is not a mem20 ber of such household, such individual shall not 

21 be considered as married. 

22 ‘‘(5) PAYMENTS TO RELATED INDIVIDUALS.— 

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

24 any amount paid by the taxpayer to an individual— 


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

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

3 to deduction for personal exemptions for de4 pendents) is allowable either to the taxpayer or 

5 his spouse, or 

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

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

8 attained the age of 19 at the close of the tax9 able year. 

10 For purposes of this paragraph, the term ‘taxable 

11 year’ means the taxable year of the taxpayer in 

12 which the service is performed. 

13 ‘‘(6) 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 ‘‘(7) 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 prescribe 

13 such regulations as may be necessary to carry out the pur14 poses of this section.’’. 

15 (b) CLERICAL AMENDMENT.—The table of sections 

16 for subpart A of part IV of subchapter A of chapter 1 

17 of the Internal Revenue Code of 1986 is amended by add18 ing at the end the following new item: 

‘‘Sec. 25E. Expenses for household and elder care services necessary for gainful 

employment.’’. 

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

20 this section shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 

Æ 


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