I 

110TH CONGRESS 

1ST SESSION H. R. 1421 

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

parents with children, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 8, 2007 

Mr. TERRY (for himself, Mr. PAUL, Mr. BARTLETT of Maryland, Mr. FRANKS

of Arizona, Mr. WAMP, Mrs. BONO, Mr. RADANOVICH, Mrs. BLACKBURN, 

Mr. MILLER of Florida, Mr. GARRETT of New Jersey, Mr. BILIRAKIS, 

Mr. SENSENBRENNER, Mr. FORTENBERRY, Mrs. MUSGRAVE, Mr. 

MCCAUL of Texas, Mr. SOUDER, and Mr. MCCOTTER) 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 

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 2007’’ . 


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1 SEC. 2. MINIMUM DEPENDENT CARE CREDIT FOR PARENTS 

2 CARING FOR CHILDREN AT HOME. 

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

4 Internal Revenue Code of 1986 (relating to special rules) 

5 is amended by adding at the end the following new para6 graph: 

7 ‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY8 AT-HOME PARENTS.—In the case of any taxpayer 

9 with one or more qualifying individuals under age 7 

10 at any time during the taxable year, such taxpayer 

11 shall be deemed to have employment-related ex12 penses with respect to each such qualifying indi13 vidual and earned income in an amount equal to the 

14 greater of— 

15 ‘‘(A) the amount of employment-related ex16 penses incurred for such qualifying individual 

17 for the taxable year (determined under this sec18 tion without regard to this paragraph), or 

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

20 such taxable year with respect to which such 

21 qualifying individual has not attained age 7 as 

22 of the beginning of such month.’’. 

23 (b) PHASEOUT OF CREDIT.—Section 21 of such Code 

24 is amended by redesignating subsection (f) as subsection 

25 (g) and inserting after subsection (e) the following new 

26 subsection: 


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1 ‘‘(f) PHASEOUT OF CREDIT.— 

2 ‘‘(1) IN GENERAL.—The credit determined 

3 under subsection (a) shall be reduced (but not below 

4 zero) by 2 percentage points for each $2,500 (or 

5 fraction thereof) by which the taxpayer’s adjusted 

6 gross income for the taxable year exceeds the thresh7 old amount. 

8 ‘‘(2) THRESHOLD AMOUNT.—For purposes of 

9 this subsection, the term ‘threshold amount’ 

10 means— 

11 ‘‘(A) $100,000 in the case of a joint re12 turn, or a surviving spouse, for which there is 

13 one qualifying individual, 

14 ‘‘(B) $120,000 in the case of a joint re15 turn, or a surviving spouse, for which there are 

16 two or three qualifying individuals, 

17 ‘‘(C) $160,000 in the case of a joint re18 turn, or a surviving spouse, for which there are 

19 four or more qualifying individuals, 

20 ‘‘(D) $75,000 in the case of a head of 

21 household for which there is one qualifying indi22 vidual, 

23 ‘‘(E) $90,000 in the case of a head of 

24 household for which there are two or three 

25 qualifying individuals, 


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1 ‘‘(F) $120,000 in the case of a head of 

2 household for which there are four or more 

3 qualifying individuals, 

4 ‘‘(G) $50,000 in the case of any other tax5 payer for which there is one qualifying indi6 vidual, 

7 ‘‘(H) $60,000 in the case of any other tax8 payer for which there are two or three quali9 fying individuals, and 

10 ‘‘(I) $80,000 in the case of any other tax11 payer for which there are four or more quali12 fying individuals.’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2006. 

16 SEC. 3. INCREASE IN PERSONAL EXEMPTION AMOUNT. 

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

18 of the Internal Revenue Code of 1986 is amended by strik19 ing ‘‘$2,000’’ and inserting ‘‘$5,000’’ . 

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

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

22 (1) by striking ‘‘1989’’ and inserting ‘‘2007’’, 

23 and 

24 (2) by striking ‘‘1988’’ in clause (ii) and insert25 ing ‘‘2006’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2006. 

4 SEC. 4. ELIMINATION OF CERTAIN MARRIAGE PENALTIES. 

5 (a) ELIMINATION OF MARRIAGE PENALTY IN ALL

6 RATE BRACKETS.—Paragraph (8) of section 1(f) of the 

7 Internal Revenue Code of 1986 (relating to phaseout of 

8 marriage penalty in 15-percent bracket) is amended to 

9 read as follows: 

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

11 With respect to taxable years beginning after De12 cember 31, 2006, in prescribing the tables under 

13 paragraph (1)— 

14 ‘‘(A) the minimum and maximum amounts 

15 of taxable income in each rate bracket in the 

16 table contained in subsection (a) shall be 200 

17 percent of the minimum and maximum amounts 

18 of taxable income in the corresponding rate 

19 bracket in the table contained in subsection (c) 

20 (after any other adjustment under this sub21 section), and 

22 ‘‘(B) the comparable taxable income 

23 amounts in the table contained in subsection 

(d) shall be 1 24 ⁄2 of the amounts determined 

25 under subparagraph (A).’’. 


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1 (b) ELIMINATION OF MARRIAGE PENALTY IN DE2 DUCTION FOR INTEREST ON STUDENT LOANS.—Para3 graph (1) of section 221 of the Internal Revenue Code 

4 of 1986 (relating to general rule for maximum deduction) 

5 is amended to read as follows: 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) GENERAL RULE.—The amount al8 lowed as a deduction under subsection (a) shall 

9 not exceed $2,500. 

10 ‘‘(B) SPECIAL RULE FOR JOINT RE11 TURN.—In the case of a husband and wife— 

12 ‘‘(i) who make a joint return for the 

13 taxable year, and 

14 ‘‘(ii) each of whom is the obligor on a 

15 qualified education loan for the qualified 

16 education expenses of the husband or wife, 

17 as the case may be, 

18 subparagraph (A) shall be applied separately 

19 with respect to the husband and the wife, ex20 cept that not more than $2,500 of interest ex21 pense may be taken into account under this sec22 tion with respect to each of the husband, the 

23 wife, and all dependents.’’. 


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

2 this section apply to taxable years beginning after Decem3 ber 31, 2006. 

4 SEC. 5. STANDARD DEDUCTION FOR BUSINESS USE OF 

5 HOME. 

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

7 the Internal Revenue Code of 1986 (relating to disallow8 ance of certain expenses in connection with business use 

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

10 adding at the end the following new paragraph: 

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

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual that is allowed a deduction for the use of 

14 a home office because of a use described in 

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

16 notwithstanding the limitations of paragraph 

17 (5), such individual may elect to use the stand18 ard home office deduction for the taxable year. 

19 ‘‘(B) STANDARD HOME OFFICE DEDUC20 TION AMOUNT.—For purposes of this para21 graph, the standard home office deduction is 

22 the lesser of— 

23 ‘‘(i) $2,500, or 


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1 ‘‘(ii) the gross income derived from 

2 the individual’s trade or business for which 

3 such use occurs.’’. 

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

5 this section shall apply to taxable years beginning after 

6 the date of the enactment of this Act. 

7 SEC. 6. INCREASE AND OTHER MODIFICATIONS IN CHILD 

8 TAX CREDIT MADE PERMANENT. 

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

10 and Tax Relief Reconciliation Act of 2001 shall not apply 

11 to the amendments made by section 201 of such Act (re12 lating to modifications to child tax credit). 

13 (b) CREDIT AMOUNT ADJUSTED FOR INFLATION.— 

14 Section 24 of the Internal Revenue Code of 1986 is 

15 amended by adding at the end the following new sub16 section: 

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

18 taxable year beginning in a calendar year after 2007, the 

19 $1,000 amount contained in subsection (a) shall be in20 creased by an amount equal to— 

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

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

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

24 the taxable year begins, determined by substituting 


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1 ‘calendar year 2006’ for ‘calendar year 1992’ in sub2 paragraph (B) thereof. 

3 Any increase determined under the preceding sentence 

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

5 SEC. 7. TELECOMMUTING TAX CREDIT. 

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

8 1986 (relating to business related credits) is amended by 

9 adding at the end the following new section: 

10 ‘‘SEC. 45O. TELECOMMUTING CREDIT. 

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

12 section 38, the amount of the telecommuting credit deter13 mined under this section for the taxable year shall be 

14 equal to 40 percent of the qualified first-year teleworking 

15 wages paid or incurred during such year. 

16 ‘‘(b) QUALIFIED FIRST-YEAR TELEWORKING

17 WAGES.—For purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘qualified first19 year teleworking wages’ means, with respect to any 

20 individual, wages attributable to service rendered 

21 during the first teleworking year with respect to 

22 such individual. 

23 ‘‘(2) FIRST TELEWORKING YEAR.—The term 

24 ‘first teleworking year’ means, with respect to any 

25 individual employed by an employer, the first 1-year 


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1 period during which such individual renders not less 

2 than 40 percent of the total service rendered to such 

3 employer during such 1-year period from the individ4 ual’s principal residence. 

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

6 TAKEN INTO ACCOUNT.—The amount of the quali7 fied first-year teleworking wages which may be taken 

8 into account with respect to any individual shall not 

9 exceed $6,000. 

10 ‘‘(c) WAGES.—For purposes of this section— 

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

12 meaning given to such term by subsection (b) of sec13 tion 3306 (determined without regard to any dollar 

14 limitation contained in such section). 

15 ‘‘(2) ON-THE-JOB TRAINING AND WORK SUP16 PLEMENTATION PAYMENTS.— 

17 ‘‘(A) EXCLUSION FOR EMPLOYERS RECEIV18 ING ON-THE-JOB TRAINING PAYMENTS.—The 

19 term ‘wages’ shall not include any amounts 

20 paid or incurred by an employer for any period 

21 to any individual for whom the employer re22 ceives federally funded payments for on-the-job 

23 training of such individual for such period. 

24 ‘‘(B) REDUCTION FOR WORK SUPPLEMEN25 TATION PAYMENTS TO EMPLOYERS.—The 


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1 amount of wages which would (but for this sub2 paragraph) be qualified wages under this sec3 tion for an employer with respect to an indi4 vidual for a taxable year shall be reduced by an 

5 amount equal to the amount of the payments 

6 made to such employer (however utilized by 

7 such employer) with respect to such individual 

8 for such taxable year under a program estab9 lished under section 482(e) of the Social Secu10 rity Act. 

11 ‘‘(d) SPECIAL RULES.—For purposes of this section, 

12 rules similar to the rules of section 52 and subsections 

13 (f), (g), (i) (other than paragraph (2) thereof), (j), and 

14 (k) of section 51 shall apply.’’. 

15 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec16 tion 38(b) of such Code is amended by striking ‘‘plus’’ 

17 at the end of paragraph (30), by striking the period at 

18 the end of paragraph (31) and inserting ‘‘, plus’’, and by 

19 adding at the end the following new paragraph: 

20 ‘‘(32) the telecommuting credit determined 

21 under section 45O(a).’’. 

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

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

24 of such Code is amended by adding at the end the fol25 lowing new item: 

‘‘Sec. 45O. Telecommuting credit.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2006, and shall take into account first tele4 working years beginning before, on, or after such date. 

5 SEC. 8. EMPLOYER-PROVIDED COMPUTER EQUIPMENT 

6 TREATED AS FRINGE BENEFIT. 

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

8 the Internal Revenue Code of 1986 is amended by striking 

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

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

11 adding at the end the following new paragraph: 

12 ‘‘(9) qualified employer-provided computer 

13 equipment fringe.’’. 

14 (b) QUALIFIED EMPLOYER-PROVIDED COMPUTER

15 EQUIPMENT FRINGE.—Section 132 of such Code is 

16 amended by redesignating subsection (o) as subsection (p) 

17 and by inserting after subsection (n) the following new 

18 subsection: 

19 ‘‘(o) QUALIFIED EMPLOYER-PROVIDED COMPUTER

20 EQUIPMENT FRINGE.—For purposes of this section— 

21 ‘‘(1) IN GENERAL.—The term ‘qualified em22 ployer-provided computer equipment fringe’ means 

23 any computer and related equipment and services 

24 provided to an employee by an employer if— 


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1 ‘‘(A) such computer and related equipment 

2 and services are necessary for the employee to 

3 perform work for the employer from the em4 ployee’s home, and 

5 ‘‘(B) the employee makes substantial busi6 ness use of the equipment in the performance 

7 of work for the employer. 

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

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

10 includes standby use for periods when work from 

11 home may be required by the employer such as dur12 ing work closures caused by the threat of terrorism, 

13 inclement weather, or natural disasters.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2006. 

17 SEC. 9. INCREASED BENEFITS FOR INDIVIDUALS PRE18 CLUDED FROM PERFORMING REMUNERA19 TIVE WORK BY NEED TO PROVIDE CHILD 

20 CARE. 

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

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

23 new section: 


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1 ‘‘INCREASED BENEFITS FOR INDIVIDUALS PRECLUDED

2 FROM PERFORMING REMUNERATIVE WORK BY NEED

3 TO PROVIDE CHILD CARE

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

5 determining entitlement to and the amount of any monthly 

6 benefit or lump-sum death payment payable under this 

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

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

9 if such individual— 

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

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

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

13 least equal to the national average wage index (as 

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

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

16 any such elapsed year after 2007, 

17 then such individual shall be credited under this title for 

18 such year after 2007 with additional wages in an amount 

19 necessary to increase the total wages credited to such indi20 vidual under this title for such year to an amount equal 

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

22 year. 

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

24 section, the term ‘qualified individual’ means, in connec25 tion with any year, any individual in any case in which— 


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

2 during such year of not less than 90 days, 

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

4 such individual lives with a qualified child, and 

5 ‘‘(3) more than 75 percent of the total remu6 neration of such individual and such individual’s 

7 spouse for such year which is attributable to wages 

8 or self-employment income earned or derived during 

9 the period during such year for which the require10 ments of paragraphs (1) and (2) are met consists of 

11 wages or self-employment income earned or derived 

12 by such spouse. 

13 ‘‘(c) QUALIFIED CHILD.—For purposes of this sec14 tion, the term ‘qualified child’ means, in connection with 

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

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

17 has not attained age 7. 

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

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

20 in connection with more than 10 elapsed years of an indi21 vidual, subsection (a) shall apply only with respect to those 

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

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

24 highest primary insurance amount for such individual, 


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1 taking into account which years would be excluded from 

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

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

4 There are authorized to be appropriated to each of the 

5 Trust Funds, consisting of the Federal Old-Age and Sur6 vivors Insurance Trust Fund, the Federal Disability In7 surance Trust Fund, and the Federal Hospital Insurance 

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

9 after 2007 to such Trust Fund from amounts in the gen10 eral fund in the Treasury not otherwise appropriated, an 

11 amount equal to the total of the additional amounts which 

12 would be appropriated to such Trust Fund for the fiscal 

13 year ending September 30 of such calendar year under 

14 section 201 or 1817 of this Act if the amounts of the addi15 tional wages credited for such calendar year by reason of 

16 subsection (a) constituted remuneration for employment 

17 (as defined in section 3121(b) of the Internal Revenue 

18 Code of 1986) for purposes of the taxes imposed by sec19 tions 3101 and 3111 of the Internal Revenue Code of 

20 1986. Amounts authorized to be appropriated under this 

21 subsection for transfer on July 1 of each calendar year 

22 shall be determined on the basis of estimates of the Com23 missioner of Social Security of the wages required to be 

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

25 proper adjustments shall be made in amounts authorized 


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1 to be appropriated for subsequent transfer to the extent 

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

3 wages so credited.’’. 

Æ 


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