I 

115TH CONGRESS 

1ST SESSION H. R. 1466 

To amend the Internal Revenue Code of 1986 to provide a high quality 

child care tax credit, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 9, 2017 

Ms. CLARK of Massachusetts (for herself, Mr. NOLAN, Ms. SA ́NCHEZ, Ms. 

LEE, Mr. SWALWELL of California, Mr. DESAULNIER, Ms. NORTON, Mr. 

RUSH, Mr. ELLISON, Mr. SOTO, and Mr. CLEAVER) 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 high quality child care tax credit, 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 ‘‘21st Century Child 

5 Care Investment Act’’. 

6 SEC. 2. HIGH QUALITY CHILD CARE TAX CREDIT. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 


lotter on DSK5VPTVN1PROD with BILLS
2 

•HR 1466 IH

1 1986 is amended by inserting before section 26 the fol2 lowing new section: 

3 ‘‘SEC. 25E. HIGH QUALITY CHILD CARE CREDIT. 

4 ‘‘(a) IN GENERAL.—In the case of an individual who 

5 elects the application of this section for the taxable year, 

6 there shall be allowed as a credit against the tax imposed 

7 by this chapter an amount equal to the applicable amount 

8 of high quality child care expenses paid by such individual 

9 during the taxable year with respect to a qualifying child. 

10 ‘‘(b) LIMITATION.— 

11 ‘‘(1) IN GENERAL.—The amount of the high 

12 quality child care expenses which may be taken into 

13 account under subsection (a) with respect to each 

14 qualifying child of the taxpayer shall not exceed— 

15 ‘‘(A) $14,000 for each qualifying child who 

16 has not attained the age of 3 by the end of the 

17 taxable year, and 

18 ‘‘(B) $5,000 for each qualifying child who 

19 has attained the age of 3 by the end of the tax20 able year. 

21 ‘‘(2) ADJUSTED GROSS INCOME LIMITATION.— 

22 The dollar limitation under paragraph (1)— 

23 ‘‘(A) shall be zero under subparagraph (A) 

24 thereof in the case of a taxpayer whose adjusted 

25 gross income for the taxable year exceeds an 


lotter on DSK5VPTVN1PROD with BILLS
3 

•HR 1466 IH

1 amount equal to 400 percent of the poverty 

2 line, and 

3 ‘‘(B) shall be zero under subparagraph (B) 

4 thereof in the case of a taxpayer whose adjusted 

5 gross income for the taxable year exceeds an 

6 amount equal to 200 percent of the poverty 

7 line. 

8 ‘‘(c) PORTION OF CREDIT REFUNDABLE.— 

9 ‘‘(1) IN GENERAL.—The aggregate credits al10 lowed to a taxpayer under subpart C shall be in11 creased by the difference of— 

12 ‘‘(A) the credit which would be allowed 

13 under this section without regard to this sub14 section and the limitation under section 26(a), 

15 over 

16 ‘‘(B) the taxpayer’s applicable family con17 tribution. 

18 The amount of the credit allowed under this sub19 section shall not be treated as a credit allowed under 

20 this subpart and shall reduce the amount of credit 

21 otherwise allowable under subsection (a) without re22 gard to section 26(a). 

23 ‘‘(2) APPLICABLE FAMILY CONTRIBUTION.— 

24 For purposes of this subsection— 


lotter on DSK5VPTVN1PROD with BILLS
4 

•HR 1466 IH

1 ‘‘(A) IN GENERAL.—The taxpayer’s appli2 cable family contribution for a taxable year 

3 shall be the sum of the amounts determined 

4 under subparagraph (B) with respect to each 

5 qualifying child of the taxpayer for which high 

6 quality child care expenses are taken into ac7 count under this section for the taxable year. 

8 ‘‘(B) AMOUNTS DETERMINED.—The 

9 amount with respect to a qualifying child under 

10 this subparagraph shall be determined as fol11 lows: 

12 ‘‘(i) In the case of a qualifying child 

13 who has not attained age 3: 

‘‘If the taxpayer’s adjusted 

gross income for the 

taxable year is the following Multiply such adjusted 

percentage of the poverty line: gross income by: 

Not more than 133 percent .............................................. 2 percent

More than 133 percent but not more than 150 percent 6 percent

More than 150 percent but not more than 200 percent 8 percent

More than 200 percent but not more than 250 percent 10 percent

More than 250 percent ..................................................... 12 percent. 

14 ‘‘(ii) In the case of a qualifying child 

15 who has attained age 3: 

‘‘If the taxpayer’s adjusted 

gross income for the 

taxable year is the following Multiply such adjusted 

percentage of the poverty line: gross income by: 

Not more than 133 percent .............................................. 2 percent

More than 133 percent but not more than 150 percent 6 percent

More than 150 percent but not more than 200 percent 8 percent. 

16 ‘‘(d) DEFINITIONS.—For purposes of this section— 


lotter on DSK5VPTVN1PROD with BILLS
5 

•HR 1466 IH

1 ‘‘(1) QUALIFYING CHILD.—The term ‘qualifying 

2 child’ means a dependent of the taxpayer (as defined 

3 in section 152(a)(1)) who has not attained age 5. 

4 ‘‘(2) HIGH QUALITY CHILD CARE EXPENSES.— 

5 ‘‘(A) IN GENERAL.—The term ‘high qual6 ity child care expenses’ means employment-re7 lated expenses (as defined in section 

8 21(b)(2)(A)) for services provided by a high 

9 quality child care center. 

10 ‘‘(B) HIGH QUALITY CHILD CARE CEN11 TER.—The term ‘high quality child care center’ 

12 means any facility, including family child care 

13 homes, which— 

14 ‘‘(i) receives a fee, payment, or grant 

15 for providing care for qualified children 

16 (other than just children who reside at the 

17 facility and regardless of whether such fa18 cility is operated for profit), 

19 ‘‘(ii) meets the State licensing require20 ments for providing care to qualified chil21 dren, and 

22 ‘‘(iii) in the case of taxable years be23 ginning more than 5 years after the date 

24 of the enactment of this section— 


lotter on DSK5VPTVN1PROD with BILLS
6 

•HR 1466 IH

1 ‘‘(I) meets the high quality rating 

2 requirements under the quality rating 

3 and improvement system of the State 

4 within which the care of the qualifying 

5 child is provided, or 

6 ‘‘(II) is certified by the Secretary 

7 of Health and Human Services under 

8 such standards as the Secretary of 

9 Health and Human Services, in con10 sultation with the Secretary, shall by 

11 regulation prescribe. 

12 ‘‘(C) QUALITY RATING AND IMPROVEMENT

13 SYSTEM.—The term ‘quality rating and im14 provement system’ means a system through 

15 which a State uses a set of progressively higher 

16 program standards to evaluate the quality of an 

17 early childhood program and to support pro18 gram improvement. Any such program shall in19 clude the following: 

20 ‘‘(i) Tiered Program Standards with 

21 multiple rating categories that clearly and 

22 meaningfully differentiate program quality 

23 levels. 


lotter on DSK5VPTVN1PROD with BILLS
7 

•HR 1466 IH

1 ‘‘(ii) Monitoring to evaluate program 

2 quality based on the program standards 

3 determined by the State. 

4 ‘‘(iii) Support to help programs and 

5 the child care workforce meet progressively 

6 higher standards (including through train7 ing, technical assistance, and financial sup8 port, and facilitating participation in orga9 nizations that foster professional develop10 ment). 

11 ‘‘(iv) Program quality ratings that are 

12 publically available and a process for vali13 dating the system. 

14 ‘‘(D) HIGH QUALITY RATING REQUIRE15 MENT.— 

16 ‘‘(i) IN GENERAL.—A facility shall be 

17 treated as meeting the high quality rating 

18 requirements of a State’s quality rating 

19 and improvement system if the facility is 

20 rated in the top tier by a State with a 3- 

21 tier rating system or in the top 2 tiers by 

22 a State with a 4- or 5-tier rating system. 

23 A facility shall not be treated as meeting 

24 the requirements of the preceding sentence 

25 unless the State’s rating system includes 


lotter on DSK5VPTVN1PROD with BILLS
8 

•HR 1466 IH

1 compensation standards updated at least 

2 every 3 years under the study required 

3 under clause (ii). 

4 ‘‘(ii) STUDY ON THE COST OF HIGH

5 QUALITY CHILD CARE.—A State shall not 

6 be treated as having a rating system for 

7 purposes of clause (i) unless the State con8 ducts a study on the cost of high quality 

9 child care at least once every 3 years to 

10 analyze costs associated with delivering 

11 high quality child care including— 

12 ‘‘(I) an assessment of the com13 pensation levels sufficient to recruit 

14 and retain a qualified and diverse 

15 child care workforce and allow entry16 level child care staff to maintain a se17 cure standard of living and meet their 

18 families’ essential needs, and 

19 ‘‘(II) information gathered 

20 through a public hearing to solicit 

21 input from relevant stakeholders in22 cluding the child care workforce. 

23 ‘‘(3) POVERTY LINE.— 

24 ‘‘(A) IN GENERAL.—The term ‘poverty 

25 line’ has the meaning given such term in secVerDate Sep 11 2014 06:23 Mar 16, 2017 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1466.IH H1466

lotter on DSK5VPTVN1PROD with BILLS
9 

•HR 1466 IH

1 tion 673(2) of the Community Services Block 

2 Grant Act (42 U.S.C. 9902(2)), including any 

3 revision required by such section. The poverty 

4 line determined with respect to taxpayer shall 

5 be the poverty line for a family of the size in6 volved. 

7 ‘‘(B) FAMILY SIZE.—The family size in8 volved with respect to any taxpayer shall be 

9 equal to the number of individuals for whom 

10 the taxpayer is allowed a deduction under sec11 tion 151 (relating to allowance of deduction for 

12 personal exemptions) for the taxable year. 

13 ‘‘(e) SPECIAL RULES.— 

14 ‘‘(1) ADVANCE PAYMENT PROGRAM.— 

15 ‘‘(A) IN GENERAL.—The Secretary of the 

16 Treasury, in consultation with the Secretary of 

17 Health and Human Services, shall establish a 

18 program— 

19 ‘‘(i) to make advance determinations 

20 with respect to the eligibility of individuals 

21 for the credit allowed under this section, 

22 and 

23 ‘‘(ii) to make monthly advance pay24 ments of the credit allowed under this sec25 tion, at the election of the taxpayer, diVerDate Sep 11 2014 06:23 Mar 16, 2017 Jkt 069200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1466.IH H1466

lotter on DSK5VPTVN1PROD with BILLS
10 

•HR 1466 IH

1 rectly to a high quality child care center 

2 providing care for a qualifying child of the 

3 taxpayer. 

4 ‘‘(B) RECONCILIATION OF CREDIT AND AD5 VANCE PAYMENT.— 

6 ‘‘(i) IN GENERAL.—The amount of 

7 the credit allowed under this section for 

8 any taxable year shall be reduced (but not 

9 below zero) by the amount of any advance 

10 payment of such credit under subpara11 graph (A). 

12 ‘‘(ii) EXCESS ADVANCE PAYMENTS.— 

13 If the advance payments to a taxpayer 

14 under subparagraph (A) for a taxable year 

15 exceed the credit allowed by this section 

16 (determined without regard to subpara17 graph (A)), the tax imposed by this chap18 ter for the taxable year shall be increased 

19 by the amount of such excess. 

20 ‘‘(iii) LIMITATION ON INCREASE.— 

21 ‘‘(I) IN GENERAL.—In the case 

22 of a taxpayer whose tax is increased 

23 (determined without regard to this 

24 clause) for the taxable year under 

25 clause (ii) with respect to a qualified 


lotter on DSK5VPTVN1PROD with BILLS
11 

•HR 1466 IH

1 child, such increase shall not exceed 

2 the applicable dollar amount deter3 mined in accordance with the table 

4 under subclause (I) in the case of any 

5 portion of the credit determined with 

6 respect to a qualifying child who has 

7 not attained the age of 3 by the end 

8 of the taxable year, and in accordance 

9 with the table under subclause (II) in 

10 the case of any portion of the credit 

11 determined with respect to a quali12 fying child who has attained the age 

13 of 3 by the end of the taxable year. 

14 ‘‘(II) UNDER AGE 3.—The table 

15 under this subclause is as follows: 

‘‘If the adjusted gross income 

(expressed as a percent The applicable dollar 

of poverty line) is: amount is: 

Less than 400 percent ................................................................. 600

At least 400 percent but less than 500 percent .......................... 1,500

At least 500 percent but less than 600 percent .......................... 2,500. 

16 ‘‘(III) AGE 3 AND 4.—The table 

17 under this subclause is as follows: 

‘‘If the adjusted gross income 

(expressed as a percent The applicable dollar 

of poverty line) is: amount is: 

Less than 200 percent ................................................................. 600

At least 200 percent but less than 300 percent .......................... 1,500

At least 300 percent but less than 400 percent .......................... 2,500. 

18 ‘‘(C) INFLATION ADJUSTMENT.— 


lotter on DSK5VPTVN1PROD with BILLS
12 

•HR 1466 IH

1 ‘‘(i) IN GENERAL.—In the case of any 

2 taxable year beginning after 2017, the dol3 lar amounts in subsection (b)(1) shall be 

4 increased by an amount equal to— 

5 ‘‘(I) such dollar amount, multi6 plied by 

7 ‘‘(II) the cost of living adjust8 ment determined under section 1(f)(3) 

9 for the calendar year in which the tax10 able year begins determined by sub11 stituting ‘calendar year 2016’ for ‘cal12 endar year 1992’ in subparagraph (B) 

13 thereof. 

14 ‘‘(ii) ROUNDING.—If the dollar 

15 amount in subsection (b)(1), after being 

16 increased under clause (i), is not a mul17 tiple of $100, such amount shall be round18 ed to the next lowest multiple of $100. 

19 ‘‘(2) INFORMATION REQUIREMENTS.—Each 

20 high quality child care center which receives pay21 ments from the Secretary under paragraph (1) shall 

22 for each calendar year provide the following informa23 tion to the Secretary and to the taxpayer with re24 spect to the child for which such payments were 

25 made: 


lotter on DSK5VPTVN1PROD with BILLS
13 

•HR 1466 IH

1 ‘‘(A) The total cost of care for such child 

2 for such year (determined without regard to the 

3 credit under this section). 

4 ‘‘(B) The aggregate amount of any ad5 vance payment of such credit made with respect 

6 to such child. 

7 ‘‘(C) The name, address, age, and TIN of 

8 the taxpayer and the child. 

9 ‘‘(D) Any information provided to such 

10 person necessary to determine eligibility for, 

11 and the amount of, such credit. 

12 ‘‘(3) COORDINATION WITH OTHER DEPENDENT

13 CARE PROVISIONS.— 

14 ‘‘(A) DEPENDENT CARE CREDIT.—No 

15 credit shall be allowed under section 21 for any 

16 taxable year for which the taxpayer elects the 

17 application of this section. 

18 ‘‘(B) DEPENDENT CARE PROGRAMS.—The 

19 amount taken into account under subsection (a) 

20 with respect to a qualifying child shall be re21 duced by the aggregate amount excludable from 

22 gross income under section 129 for the taxable 

23 year with respect to such child. 

24 ‘‘(4) RULES RELATING TO MARRIAGE AND PAY25 MENTS TO RELATED INDIVIDUALS.—Rules similar to 


lotter on DSK5VPTVN1PROD with BILLS
14 

•HR 1466 IH

1 the rules of paragraphs (2), (3), (4), and (6) of sec2 tion 21(e) shall apply for purposes of this section.’’. 

3 (b) CONFORMING AMENDMENT.—Section 1324(b)(2) 

4 of title 31, United States Code, is amended by inserting 

5 ‘‘25E,’’ after ‘‘25A,’’. 

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

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

8 of such Code is amended by inserting before the item re9 lating to section 26 the following new item: 

‘‘Sec. 25E. High quality child care credit.’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2016. 

13 SEC. 3. PORTION OF DEPENDENT CARE CREDIT MADE RE14 FUNDABLE. 

15 (a) IN GENERAL.—Section 21 of the Internal Rev16 enue Code of 1986 is amended by redesignating subsection 

17 (f) as subsection (g) and by inserting after subsection (e) 

18 the following new subsection: 

19 ‘‘(f) PORTION OF CREDIT REFUNDABLE.—The ag20 gregate credits allowed to a taxpayer under subpart C 

21 shall be increased by the lesser of— 

22 ‘‘(1) the credit which would be allowed under 

23 this section without regard to this subsection and 

24 the limitation under section 26(a), or 


lotter on DSK5VPTVN1PROD with BILLS
15 

•HR 1466 IH

1 ‘‘(2)(A) in the case of a taxpayer with 1 quali2 fying child, $1,050, or 

3 ‘‘(B) in the case of a taxpayer with more than 

4 1 qualifying child, $2,100. 

5 The amount of the credit allowed under this subsection 

6 shall not be treated as a credit allowed under this subpart 

7 and shall reduce the amount of credit otherwise allowable 

8 under subsection (a) without regard to section 26(a).’’. 

9 (b) CLERICAL AMENDMENT.—Section 1324(b)(2) of 

10 title 31, United States Code, is amended by inserting 

11 ‘‘24,’’ before ‘‘25A,’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2016. 

Æ 


lotter on DSK5VPTVN1PROD with BILLS