I 
119TH CONGRESS 
1ST SESSION H. R. 2994 
To amend the Internal Revenue Code of 1986 to enhance the Child and 
Dependent Care Tax Credit and make the credit fully refundable for 
certain taxpayers. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 24, 2025 
Mr. DAVIS of Illinois (for himself, Ms. DELBENE, Ms. SA´NCHEZ, Mr. BEYER, 
Ms. MOORE of Wisconsin, Ms. CHU, Ms. SEWELL, Mr. BOYLE of Penn-
sylvania, Ms. MCCOLLUM, Ms. BROWNLEY, Mr. LARSON of Connecticut, 
Ms. WILSON of Florida, Ms. NORTON, Mr. CLEAVER, Mr. CARSON, Mr. 
KHANNA, Mr. CONNOLLY, and Mr. PANETTA) 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 enhance 
the Child and Dependent Care Tax Credit and make 
the credit fully refundable for certain taxpayers. 
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 and Dependent 
Care Tax Credit Enhancement Act of 2025’’. 
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SEC. 2. ENHANCEMENT OF CHILD AND DEPENDENT CARE 
TAX CREDIT. 
(a) IN GENERAL.—Paragraph (2) of section 21(a) of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(2) APPLICABLE PERCENTAGE.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘applicable percentage’ 
means 50 percent reduced (but not below the 
phaseout percentage) by 1 percentage point for 
each $2,000 (or fraction thereof) by which the 
taxpayer’s adjusted gross income for the taxable 
year exceeds $125,000. 
‘‘(B) PHASEOUT PERCENTAGE.—For pur-
poses of subparagraph (A), the term ‘phaseout 
percentage’ means 20 percent reduced (but not 
below zero) by 1 percentage point for each 
$2,000 (or fraction thereof) by which the tax-
payer’s adjusted gross income for the taxable 
year exceeds $400,000.’’. 
(b) INCREASE IN DOLLAR LIMIT ON AMOUNT CRED-
ITABLE.—Subsection (c) of section 21 of the Internal Rev-
enue Code of 1986 is amended— 
(1) in paragraph (1), by striking ‘‘$3,000’’ and 
inserting ‘‘$8,000’’; and 
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(2) in paragraph (2), by striking ‘‘$6,000’’ and 
inserting ‘‘$16,000’’. 
(c) SPECIAL RULE FOR MARRIED COUPLES FILING 
SEPARATE RETURNS.—Paragraph (2) of section 21(e) of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(2) MARRIED COUPLES FILING SEPARATE RE-
TURNS.— 
‘‘(A) IN GENERAL.—In the case of married 
individuals who do not file a joint return for the 
taxable year— 
‘‘(i) the applicable percentage under 
subsection (a)(2) and the number of quali-
fying individuals and aggregate amount ex-
cludable under section 129 for purposes of 
subsection (c) shall be determined with re-
spect to each such individual as if the indi-
vidual had filed a joint return with the in-
dividual’s spouse, and 
‘‘(ii) the aggregate amount of the 
credits allowed under this section for such 
taxable year with respect to both spouses 
shall not exceed the amount which would 
have been allowed under this section if the 
individuals had filed a joint return. 
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‘‘(B) REGULATIONS.—The Secretary shall 
prescribe such regulations or other guidance as 
is necessary to carry out the purposes of this 
subsection.’’. 
(d) ADJUSTMENT FOR INFLATION.—Section 21 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new subsection: 
‘‘(i) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of a calendar 
year beginning after 2025, the $125,000 amount in 
paragraph (2) of subsection (a) and the dollar 
amounts in subsection (c) shall each be increased by 
an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(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 dollar amount, after 
being increased under paragraph (1), is not a mul-
tiple of $100, such dollar amount shall be rounded 
to the next lowest multiple of $100.’’. 
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(e) CREDIT MADE REFUNDABLE.—Section 21(g) of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(g) CREDIT MADE REFUNDABLE FOR CERTAIN IN-
DIVIDUALS.—If the taxpayer (in the case of a joint return, 
either spouse) has a principal place of abode in the United 
States (determined as provided in section 32) for more 
than one-half of the taxable year, the credit allowed under 
subsection (a) shall be treated as a credit allowed under 
subpart C (and not allowed under this subpart).’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2024. 
Æ 
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