I 
118TH CONGRESS 
1ST SESSION H. R. 4571 
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 
JULY 12, 2023 
Mr. CARBAJAL (for himself and Mrs. CHAVEZ-DEREMER) 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 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 Investment 
Act of 2023’’. 
SEC. 2. EXPANSION 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 such Code is amended by striking 
‘‘$150,000’’ and inserting ‘‘$500,000’’. 
(c) TREATMENT OF JOINTLY OWNED OR OPERATED 
CHILDCARE FACILITY.—Section 45F(c)(1) of such Code 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(C) JOINTLY
OWNED
OR
OPERATED 
CHILDCARE
FACILITY.—For purposes of sub-
paragraph (A)(i)(I), a qualified childcare facil-
ity shall not fail to be treated as being of the 
taxpayer merely because such facility is jointly 
owned or operated by the taxpayer and other 
persons.’’. 
(d) IN-HOME CHILDCARE SERVICE EXPENSES ELI-
GIBLE FOR CREDIT.—Section 45F(c)(1)(A)(iii) of such 
Code is amended by striking ‘‘facility’’ and inserting ‘‘pro-
vider’’. 
(e) SPECIAL RULE FOR SMALL BUSINESSES.—Sec-
tion 45F(e) of such Code is amended by adding at the 
end the following new paragraph: 
‘‘(4) SMALL BUSINESSES.—In the case of a tax-
payer that meets the gross receipts test of section 
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448(c), determined after substituting ‘5-taxable- 
year’ for ‘3-taxable-year’ in such section and ‘5-year’ 
for ‘3-year’ each place such term appears in para-
graph (3)(A) of such section— 
‘‘(A) subsection (a)(1) shall be applied by 
substituting ‘60 percent’ for ‘50 percent’, and 
‘‘(B) subsection (b) shall be applied by 
substituting ‘$600,000’ for ‘$500,000’.’’. 
(f) 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) Section 129(a)(2)(A) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘$5,000 ($2,500’’ 
and inserting ‘‘the applicable limitation amount (half such 
amount’’. 
(b) Section 129(a)(2) of such Code is amended by 
adding at the end the following new subparagraph: 
‘‘(E) APPLICABLE LIMITATION AMOUNT.— 
For purposes of this paragraph, the term ‘ap-
plicable limitation amount’ means the amount 
that is the sum of $10,000 plus $2,000 for each 
individual described in subparagraph (A) or (B) 
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of section 21(b)(1) with respect to such tax-
payer.’’. 
(c) 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. 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-
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centage’ means 50 percent reduced (but not below 
35 percent) by 1 percentage point for each $2,000 
(or fraction thereof) by which the taxpayer’s ad-
justed gross income for the taxable year exceeds 
$15,000. 
‘‘(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 
‘‘(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. 
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‘‘(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, 
and 
‘‘(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— 
‘‘(i) a qualifying individual described 
in paragraph (1)(A), or 
‘‘(ii) a qualifying individual (not de-
scribed in paragraph (1)(A)) who regularly 
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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 six 
individuals (other than individuals who re-
side at the facility), and 
‘‘(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). 
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‘‘(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) $3,000 if there is 1 qualifying individual 
with respect to the taxpayer for such taxable year, 
or 
‘‘(2) $6,000 if there are 2 or more qualifying 
individuals with respect to the taxpayer for such tax-
able year. 
The amount determined under paragraph (1) or (2) 
(whichever is applicable) shall be reduced by the aggregate 
amount excludable from gross income under section 129 
for the taxable 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
HIM-
SELF.—In the case of a spouse who is a student or 
a qualifying individual described in subsection 
(b)(1)(C), for purposes 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) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2023, the dollar amounts in 
this section shall 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-
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mined by substituting ‘calendar year 2022’ for 
‘calendar year 2016’ in subparagraph (A)(ii). 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $10, such increase 
shall be rounded to the nearest multiple of $10. 
‘‘(f) 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 
the taxable year, the credit shall be allowed under 
subsection (a) only if the taxpayer and his spouse 
file a joint return for the taxable year. 
‘‘(3) MARITAL STATUS.—An individual legally 
separated from his spouse under a decree of divorce 
or of separate maintenance shall not be considered 
as married. 
‘‘(4) CERTAIN
MARRIED
INDIVIDUALS
LIVING 
APART.—If— 
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