I 

116TH CONGRESS 

1ST SESSION H. R. 1696 

To amend the Internal Revenue Code of 1986 to increase and make fully 

refundable the Child and Dependent Care Tax Credit, to increase the 

maximum amount excludable from gross income for employer-provided 

dependent care assistance, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2019 

Mrs. MURPHY (for herself and Mr. SMITH of Missouri) 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 increase 

and make fully refundable the Child and Dependent Care 

Tax Credit, to increase the maximum amount excludable 

from gross income for employer-provided dependent care 

assistance, 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 ‘‘Promoting Affordable 

5 Childcare for Everyone Act’’ or the ‘‘PACE Act’’. 


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1 SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE 

2 TAX CREDIT. 

3 (a) IN GENERAL.—The Internal Revenue Code of 

4 1986 is amended— 

5 (1) by redesignating section 21 as section 36C; 

6 and 

7 (2) by moving section 36C, as so redesignated, 

8 from subpart A of part IV of subchapter A of chap9 ter 1 to the location immediately before section 37 

10 in subpart C of part IV of subchapter A of chapter 

11 1. 

12 (b) TECHNICAL AMENDMENTS.— 

13 (1) Paragraph (1) of section 23(f) of the Inter14 nal Revenue Code of 1986 is amended by striking 

15 ‘‘21(e)’’ and inserting ‘‘36C(e)’’. 

16 (2) Paragraph (6) of section 35(g) of such Code 

17 is amended by striking ‘‘21(e)’’ and inserting 

18 ‘‘36C(e)’’. 

19 (3) Paragraph (1) of section 36C(a) of such 

20 Code (as redesignated by subsection (a)) is amended 

21 by striking ‘‘this chapter’’ and inserting ‘‘this sub22 title’’. 

23 (4) Subparagraph (C) of section 129(a)(2) of 

24 such Code is amended by striking ‘‘section 21(e)’’ 

25 and inserting ‘‘section 36C(e)’’. 


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1 (5) Paragraph (2) of section 129(b) of such 

2 Code is amended by striking ‘‘section 21(d)(2)’’ and 

3 inserting ‘‘section 36C(d)(2)’’. 

4 (6) Paragraph (1) of section 129(e) of such 

5 Code is amended by striking ‘‘section 21(b)(2)’’ and 

6 inserting ‘‘section 36C(b)(2)’’. 

7 (7) Subsection (e) of section 213 of such Code 

8 is amended by striking ‘‘section 21’’ and inserting 

9 ‘‘section 36C’’. 

10 (8) Subparagraph (H) of section 6213(g)(2) of 

11 such Code is amended by striking ‘‘section 21’’ and 

12 inserting ‘‘section 36C’’. 

13 (9) Subparagraph (L) of section 6213(g)(2) of 

14 such Code is amended by striking ‘‘section 21, 24, 

15 or 32,’’ and inserting ‘‘section 24, 32, or 36C,’’. 

16 (10) Paragraph (2) of section 1324(b) of title 

17 31, United States Code, is amended by inserting 

18 ‘‘36C,’’ after ‘‘36B,’’. 

19 (11) The table of sections for subpart C of part 

20 IV of subchapter A of chapter 1 of the Internal Rev21 enue Code of 1986 is amended by inserting after the 

22 item relating to section 36B the following: 

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

gainful employment.’’. 


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1 (12) The table of sections for subpart A of part 

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

3 amended by striking the item relating to section 21. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2019. 

7 SEC. 3. ENHANCEMENT OF THE CHILD AND DEPENDENT 

8 CARE TAX CREDIT. 

9 (a) IN GENERAL.—Section 36C of the Internal Rev10 enue Code of 1986, as redesignated by section 2 of this 

11 Act, is amended— 

12 (1) in paragraph (2) of subsection (a), by strik13 ing ‘‘35 percent reduced (but not below 20 percent)’’ 

14 and inserting ‘‘50 percent reduced (but not below 35 

15 percent)’’; 

16 (2) by redesignating subsection (f) as sub17 section (g); and 

18 (3) by inserting after subsection (e) the fol19 lowing new subsection: 

20 ‘‘(f) INFLATION ADJUSTMENT.— 

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

22 year beginning after 2019, each of the dollar 

23 amounts in subsections (a)(2) and (c) shall be in24 creased by an amount equal to— 

25 ‘‘(A) such dollar amount, multiplied by 


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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar 

3 year in which the taxable year begins, deter4 mined by substituting ‘calendar year 2018’ for 

5 ‘calendar year 2016’ in subparagraph (A)(ii) 

6 thereof. 

7 ‘‘(2) ROUNDING.—If any increase determined 

8 under paragraph (1) is not a multiple of $50, such 

9 increase shall be rounded to the nearest multiple of 

10 $50.’’. 

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2019. 

14 SEC. 4. INCREASE IN EXCLUSION FOR EMPLOYER-PRO15 VIDED DEPENDENT CARE ASSISTANCE. 

16 (a) IN GENERAL.—Subparagraph (A) of section 

17 129(a)(2) of the Internal Revenue Code of 1986 (relating 

18 to dependent care assistance programs) is amended by 

19 striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$7,500 (half 

20 such dollar amount’’. 

21 (b) INFLATION ADJUSTMENT.—Paragraph (2) of sec22 tion 129(a) of such Code is amended by redesignating sub23 paragraph (C) as subparagraph (D) and by inserting after 

24 subparagraph (B) the following new subparagraph: 


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1 ‘‘(C) INFLATION ADJUSTMENT.—In the 

2 case of any taxable year beginning in a calendar 

3 year after 2020, the $7,500 amount in subpara4 graph (A) shall be increased by an amount 

5 equal to— 

6 ‘‘(i) such dollar amount, multiplied by 

7 ‘‘(ii) the cost-of-living adjustment de8 termined under section 1(f)(3) for the cal9 endar year in which the taxable year be10 gins, determined by substituting ‘calendar 

11 year 2019’ for ‘calendar year 2016’ in sub12 paragraph (A)(ii) thereof. 

13 Any increase determined under the preceding 

14 sentence shall be rounded to the nearest mul15 tiple of $100.’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2019. 

Æ 


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