I 
119TH CONGRESS 
1ST SESSION H. R. 1827 
To amend the Internal Revenue Code of 1986 to expand the employer- 
provided child care credit and the dependent care assistance exclusion. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 4, 2025 
Mr. CARBAJAL (for himself, Mr. LAWLER, Ms. DAVIDS of Kansas, and Mr. 
CISCOMANI) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
the employer-provided child care credit and the depend-
ent care assistance exclusion. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Child Care Availability 
and Affordability Act’’. 
SEC. 2. EXPANSION OF EMPLOYER-PROVIDED CHILD CARE 
CREDIT. 
(a) INCREASE OF AMOUNT OF QUALIFIED CHILD 
CARE EXPENDITURES TAKEN INTO ACCOUNT.—Section 
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45F(a)(1) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘25 percent’’ and inserting ‘‘50 percent’’. 
(b) INCREASE OF MAXIMUM CREDIT AMOUNT.—Sec-
tion 45F(b) of the Internal Revenue Code of 1986 is 
amended 
by 
striking 
‘‘$150,000’’ 
and 
inserting 
‘‘$500,000’’. 
(c) TREATMENT OF JOINTLY OWNED OR OPERATED 
CHILDCARE FACILITY.—Section 45F(c)(1) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(C) JOINTLY
OWNED
OR
OPERATED 
CHILDCARE
FACILITY.—For purposes of sub-
paragraph (A)(i)(I), a facility shall not fail to 
be treated as a qualified childcare facility of the 
taxpayer merely because such facility is jointly 
owned or operated by the taxpayer and other 
persons.’’. 
(d) SPECIAL RULE FOR SMALL BUSINESSES.—Sec-
tion 45F(e) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) SMALL BUSINESSES.— 
‘‘(A) IN GENERAL.—In the case of a tax-
payer described in subparagraph (B)— 
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‘‘(i) subsection (a)(1) shall be applied 
by substituting ‘60 percent’ for ‘50 per-
cent’, and 
‘‘(ii) subsection (b) shall be applied by 
substituting ‘$600,000’ for ‘$500,000’. 
‘‘(B) TAXPAYER DESCRIBED.—A taxpayer 
described in this subparagraph is a taxpayer 
that meets the gross receipts test of section 
448(c), determined— 
‘‘(i) by substituting ‘5-taxable-year’ 
for ‘3-taxable-year’ in paragraph (1) there-
of, and 
‘‘(ii) by substituting ‘5-year’ for ‘3- 
year’ each place such term appears in 
paragraph (3)(A) thereof.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this section. 
SEC. 3. INCREASE IN AMOUNT EXCLUDABLE FOR DEPEND-
ENT CARE ASSISTANCE PROGRAMS. 
(a) IN GENERAL.—Section 129(a)(2)(A) of the Inter-
nal Revenue Code of 1986 is amended by striking ‘‘$5,000 
($2,500’’ and inserting ‘‘$7,500 ($3,750’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this section. 
SEC. 4. HOUSEHOLD AND DEPENDENT CARE CREDIT IN-
CREASED AND MADE REFUNDABLE. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amending by inserting after section 36B the fol-
lowing new section: 
‘‘SEC. 36C. EXPENSES FOR HOUSEHOLD AND DEPENDENT 
CARE SERVICES NECESSARY FOR GAINFUL 
EMPLOYMENT. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—In the case of an individual 
for which there are 1 or more qualifying individuals 
with respect to such individual, there shall be al-
lowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to the 
applicable percentage of the employment-related ex-
penses paid by such individual during the taxable 
year. 
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For 
purposes of paragraph (1), the term ‘applicable per-
centage’ means 50 percent— 
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‘‘(A) reduced (but not below 35 percent) 
by 1 percentage point for each $2,000 (or frac-
tion thereof) by which the taxpayer’s adjusted 
gross income for the taxable year exceeds 
$15,000, and 
‘‘(B) further reduced (but not below zero) 
by 1 percentage point for each $2,000 (or frac-
tion thereof) by which the taxpayer’s adjusted 
gross income for the taxable year exceeds 
$150,000. 
‘‘(b) DEFINITIONS OF QUALIFYING INDIVIDUAL AND 
EMPLOYMENT-RELATED EXPENSES.—For purposes of 
this section— 
‘‘(1) 
QUALIFYING
INDIVIDUAL.—The 
term 
‘qualifying individual’ means— 
‘‘(A) a dependent of the taxpayer (as de-
fined in section 152(a)(1)) who has not attained 
age 13, 
‘‘(B) a dependent of the taxpayer (as de-
fined in section 152, determined without regard 
to subsections (b)(1), (b)(2), and (d)(1)(B)) 
who is physically or mentally incapable of car-
ing for himself or herself and who has the same 
principal place of abode as the taxpayer for 
more than one-half of such taxable year, or 
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‘‘(C) the spouse of the taxpayer, if the 
spouse is physically or mentally incapable of 
caring for himself or herself and who has the 
same principal place of abode as the taxpayer 
for more than one-half of such taxable year. 
‘‘(2) EMPLOYMENT-RELATED EXPENSES.— 
‘‘(A) IN
GENERAL.—The term ‘employ-
ment-related expenses’ means amounts paid for 
the following expenses, but only if such ex-
penses are incurred to enable the taxpayer to be 
gainfully employed for any period for which 
there are 1 or more qualifying individuals with 
respect to the taxpayer: 
‘‘(i) Expenses for household services. 
‘‘(ii) Expenses for the care of a quali-
fying individual. 
Such term shall not include any amount paid 
for services outside the taxpayer’s household at 
a camp where the qualifying individual stays 
overnight. 
‘‘(B) 
EXCEPTION.—Employment-related 
expenses described in subparagraph (A) which 
are incurred for services outside the taxpayer’s 
household shall be taken into account only if in-
curred for the care of— 
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‘‘(i) a qualifying individual described 
in paragraph (1)(A), or 
‘‘(ii) a qualifying individual (not de-
scribed in paragraph (1)(A)) who regularly 
spends at least 8 hours each day in the 
taxpayer’s household. 
‘‘(C) DEPENDENT
CARE
CENTERS.—Em-
ployment-related expenses described in subpara-
graph (A) which are incurred for services pro-
vided outside the taxpayer’s household by a de-
pendent care center (as defined in subpara-
graph (D)) shall be taken into account only if— 
‘‘(i) such center complies with all ap-
plicable laws and regulations of a State or 
unit of local government, and 
‘‘(ii) the requirements of subpara-
graph (B) are met. 
‘‘(D) DEPENDENT
CARE
CENTER
DE-
FINED.—For purposes of this paragraph, the 
term ‘dependent care center’ means any facility 
which— 
‘‘(i) provides care for more than 6 in-
dividuals (other than individuals who re-
side at the facility), and 
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‘‘(ii) receives a fee, payment, or grant 
for providing services for any of the indi-
viduals (regardless of whether such facility 
is operated for profit). 
‘‘(c) DOLLAR LIMIT ON AMOUNT CREDITABLE.—The 
amount of the employment-related expenses incurred dur-
ing any taxable year which may be taken into account 
under subsection (a) shall not exceed— 
‘‘(1) $5,000 if there is 1 qualifying individual 
with respect to the taxpayer for such taxable year, 
or 
‘‘(2) $8,000 if there are 2 or more qualifying 
individuals with respect to the taxpayer for such tax-
able year. 
‘‘(d) EARNED INCOME LIMITATION.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the amount of the employ-
ment-related expenses incurred during any taxable 
year which may be taken into account under sub-
section (a) shall not exceed— 
‘‘(A) in the case of an individual who is 
not married at the close of such year, such indi-
vidual’s earned income for such year, or 
‘‘(B) in the case of an individual who is 
married at the close of such year, the lesser of 
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such individual’s earned income or the earned 
income of his spouse for such year. 
‘‘(2) SPECIAL
RULE
FOR
SPOUSE
WHO
IS
A 
STUDENT OR INCAPABLE OF CARING FOR SELF.—In 
the case of a spouse who is a student or a qualifying 
individual described in subsection (b)(1)(C), for pur-
poses of paragraph (1), such spouse shall be deemed 
for each month during which such spouse is a full- 
time student at an educational institution, or is such 
a qualifying individual, to be gainfully employed and 
to have earned income of not less than— 
‘‘(A) $250 if subsection (c)(1) applies for 
the taxable year, or 
‘‘(B) $500 if subsection (c)(2) applies for 
the taxable year. 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) PLACE
OF
ABODE.—An individual shall 
not be treated as having the same principal place of 
abode of the taxpayer if at any time during the tax-
able year of the taxpayer the relationship between 
the individual and the taxpayer is in violation of 
local law. 
‘‘(2) MARRIED COUPLES MUST FILE JOINT RE-
TURN.—If the taxpayer is married at the close of 
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the taxable year, the credit shall be allowed under 
subsection (a) only if the taxpayer and the tax-
payer’s spouse file a joint return for the taxable 
year. 
‘‘(3) MARITAL STATUS.—An individual legally 
separated from the individual’s spouse under a de-
cree of divorce or of separate maintenance shall not 
be considered as married. 
‘‘(4) CERTAIN
MARRIED
INDIVIDUALS
LIVING 
APART.—If— 
‘‘(A) an individual who is married and who 
files a separate return— 
‘‘(i) maintains as the individual’s 
home a household which constitutes for 
more than 1⁄2 of the taxable year the prin-
cipal place of abode of a qualifying indi-
vidual, and 
‘‘(ii) furnishes over half of the cost of 
maintaining such household during the 
taxable year, and 
‘‘(B) during the last 6 months of such tax-
able year such individual’s spouse is not a mem-
ber of such household, 
such individual shall not be considered as married. 
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‘‘(5) SPECIAL DEPENDENCY TEST IN CASE OF 
DIVORCED PARENTS, ETC.—If— 
‘‘(A) section 152(e) applies to any child 
with respect to any calendar year, and 
‘‘(B) such child is under the age of 13 or 
is physically or mentally incapable of caring for 
himself or herself, 
in the case of any taxable year beginning in such 
calendar year, such child shall be treated as a quali-
fying individual described in subparagraph (A) or 
(B) of subsection (b)(1) (whichever is appropriate) 
with respect to the custodial parent (as defined in 
section 152(e)(4)(A)), and shall not be treated as a 
qualifying individual with respect to the noncustodial 
parent. 
‘‘(6) PAYMENTS TO RELATED INDIVIDUALS.— 
No credit shall be allowed under subsection (a) for 
any amount paid by the taxpayer to an individual— 
‘‘(A) with respect to whom, for the taxable 
year, a deduction under section 151(c) (relating 
to deduction for personal exemptions for de-
pendents) is allowable either to the taxpayer or 
the taxpayer’s spouse, or 
‘‘(B) who is a child of the taxpayer (within 
the meaning of section 152(f)(1)) who has not 
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attained the age of 19 at the close of the tax-
able year. 
For purposes of this paragraph, the term ‘taxable 
year’ means the taxable year of the taxpayer in 
which the service is performed. 
‘‘(7) STUDENT.—The term ‘student’ means an 
individual who during each of 5 calendar months 
during the taxable year is a full-time student at an 
educational organization. 
‘‘(8) EDUCATIONAL ORGANIZATION.—The term 
‘educational organization’ means an educational or-
ganization described in section 170(b)(1)(A)(ii). 
‘‘(9) IDENTIFYING
INFORMATION
REQUIRED 
WITH RESPECT TO SERVICE PROVIDER.—No credit 
shall be allowed under subsection (a) for any amount 
paid to any person unless— 
‘‘(A) the name, address, and taxpayer 
identification number of such person are in-
cluded on the return claiming the credit, or 
‘‘(B) if such person is an organization de-
scribed in section 501(c)(3) and exempt from 
tax under section 501(a), the name and address 
of such person are included on the return 
claiming the credit. 
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In the case of a failure to provide the information 
required under the preceding sentence, the preceding 
sentence shall not apply if it is shown that the tax-
payer exercised due diligence in attempting to pro-
vide the information so required. 
‘‘(10) IDENTIFYING
INFORMATION
REQUIRED 
WITH RESPECT TO QUALIFYING INDIVIDUALS.—No 
credit shall be allowed under this section with re-
spect to any qualifying individual unless the TIN of 
such individual is included on the return claiming 
the credit. 
‘‘(f) REGULATIONS.—The Secretary shall issue such 
regulations or other guidance as may be necessary or ap-
propriate to carry out the purposes of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1324(b) of title 31 is amended by 
inserting ‘‘36C,’’ after ‘‘36B,’’. 
(2) Section 21 of the Internal Revenue Code of 
1986 is repealed. 
(3) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code is 
amended by striking the item relating to section 21. 
(4) Section 6211(b)(4)(A) of such Code is 
amended by striking ‘‘21 by reason of subsection (g) 
thereof,’’. 
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(5) Section 6213(g)(2) of such Code is amend-
ed— 
(A) in subparagraph (H), by striking ‘‘sec-
tion 21’’ and inserting ‘‘section 36C’’, and 
(B) in subparagraph (L)— 
(i) by striking ‘‘21,’’, and 
(ii) by inserting ‘‘36C,’’ after ‘‘32,’’. 
(6) The following sections of such Code are 
each amended by striking ‘‘section 21(e)’’ and in-
serting ‘‘section 36C(e)’’. 
(A) Section 23(f)(1). 
(B) Section 35(g)(6). 
(C) Section 129(a)(2)(C). 
(7) Section 129 of such Code is further amend-
ed— 
(A) in subsection (b)(2), by striking ‘‘sec-
tion 
21(d)(2)’’ 
and 
inserting 
‘‘section 
36C(d)(2)’’, and 
(B) in subsection (e)(1), by striking ‘‘sec-
tion 
21(b)(2)’’ 
and 
inserting 
‘‘section 
36C(b)(2)’’. 
(8) Section 213(e) of such Code is amended by 
striking ‘‘section 21’’ and inserting ‘‘section 36C’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart C of part IV of subchapter A of chapter 1 
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