I 
119TH CONGRESS 
1ST SESSION H. R. 2900 
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 
APRIL 10, 2025 
Ms. TENNEY (for herself and Mr. SCHNEIDER) 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. 
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 ‘‘Promoting Affordable 
Childcare for Everyone Act’’ or the ‘‘PACE Act’’. 
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SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE 
TAX CREDIT. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended— 
(1) by redesignating section 21 as section 36C; 
and 
(2) by moving section 36C, as so redesignated, 
from subpart A of part IV of subchapter A of chap-
ter 1 to the location immediately before section 37 
in subpart C of part IV of subchapter A of chapter 
1. 
(b) TECHNICAL AMENDMENTS.— 
(1) Paragraph (1) of section 23(f) of the Inter-
nal Revenue Code of 1986 is amended by striking 
‘‘21(e)’’ and inserting ‘‘36C(e)’’. 
(2) Paragraph (6) of section 35(g) of such Code 
is amended by striking ‘‘21(e)’’ and inserting 
‘‘36C(e)’’. 
(3) Paragraph (1) of section 36C(a) of such 
Code (as redesignated by subsection (a)) is amended 
by striking ‘‘this chapter’’ and inserting ‘‘this sub-
title’’. 
(4) Subparagraph (C) of section 129(a)(2) of 
such Code is amended by striking ‘‘section 21(e)’’ 
and inserting ‘‘section 36C(e)’’. 
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(5) Paragraph (2) of section 129(b) of such 
Code is amended by striking ‘‘section 21(d)(2)’’ and 
inserting ‘‘section 36C(d)(2)’’. 
(6) Paragraph (1) of section 129(e) of such 
Code is amended by striking ‘‘section 21(b)(2)’’ and 
inserting ‘‘section 36C(b)(2)’’. 
(7) Subsection (e) of section 213 of such Code 
is amended by striking ‘‘section 21’’ and inserting 
‘‘section 36C’’. 
(8) Subparagraph (H) of section 6213(g)(2) of 
such Code is amended by striking ‘‘section 21’’ and 
inserting ‘‘section 36C’’. 
(9) Subparagraph (L) of section 6213(g)(2) of 
such Code is amended by inserting ‘‘36C,’’ after 
‘‘32,’’. 
(10) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting 
‘‘36C,’’ after ‘‘36B,’’. 
(11) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by inserting after the 
item relating to section 36B the following: 
‘‘Sec. 36C. Expenses for household and dependent care services necessary for 
gainful employment.’’. 
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(12) 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. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 3. ENHANCEMENT OF THE CHILD AND DEPENDENT 
CARE TAX CREDIT. 
(a) IN GENERAL.—Section 36C of the Internal Rev-
enue Code of 1986, as redesignated by section 2 of this 
Act, is amended— 
(1) in paragraph (2) of subsection (a), by strik-
ing ‘‘35 percent reduced (but not below 20 percent)’’ 
and inserting ‘‘50 percent reduced (but not below 35 
percent)’’; 
(2) by striking subsection (g) and redesignating 
subsection (f) as subsection (g); and 
(3) by inserting after subsection (e) the fol-
lowing new subsection: 
‘‘(f) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2025, each of the dollar 
amounts in subsections (a)(2) and (c) shall be in-
creased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2024’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.—If any increase determined 
under paragraph (1) is not a multiple of $50, such 
increase shall be rounded to the nearest multiple of 
$50.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 4. INCREASE IN EXCLUSION FOR EMPLOYER-PRO-
VIDED DEPENDENT CARE ASSISTANCE. 
(a) IN GENERAL.—Subparagraph (A) of section 
129(a)(2) of the Internal Revenue Code of 1986 (relating 
to dependent care assistance programs) is amended by 
striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$7,500 (half 
such dollar amount’’. 
(b) INFLATION ADJUSTMENT.—Paragraph (2) of sec-
tion 129(a) of such Code is amended by striking subpara-
graph (D) and inserting the following new subparagraph: 
‘‘(D) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning in a calendar 
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year after 2026, the $7,500 amount in subpara-
graph (A) shall be increased by an amount 
equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2025’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest mul-
tiple of $100.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
Æ 
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