(b) ELIMINATION OF MARRIAGE PENALTY IN DE-
DUCTION FOR INTEREST ON STUDENT LOANS.—Para-
graph (1) of section 221 of the Internal Revenue Code 
of 1986 (relating to general rule for maximum deduction) 
is amended to read as follows: 
‘‘(1) IN GENERAL.— 
‘‘(A) GENERAL
RULE.—The amount al-
lowed as a deduction under subsection (a) shall 
not exceed $2,500. 
‘‘(B) SPECIAL
RULE
FOR
JOINT
RE-
TURN.—In the case of a husband and wife— 
‘‘(i) who make a joint return for the 
taxable year, and 
‘‘(ii) each of whom is the obligor on a 
qualified education loan for the qualified 
education expenses of the husband or wife, 
as the case may be, 
subparagraph (A) shall be applied separately 
with respect to the husband and the wife, ex-
cept that not more than $2,500 of interest ex-
pense may be taken into account under this sec-
tion with respect to each of the husband, the 
wife, and all dependents.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section apply to taxable years beginning after Decem-
ber 31, 2006. 
SEC. 5. STANDARD DEDUCTION FOR BUSINESS USE OF 
HOME. 
(a) IN GENERAL.—Subsection (c) of section 280A of 
the Internal Revenue Code of 1986 (relating to disallow-
ance of certain expenses in connection with business use 
of home, rental of vacation homes, etc.) is amended by 
adding at the end the following new paragraph: 
‘‘(7) STANDARD HOME OFFICE DEDUCTION.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual that is allowed a deduction for the use of 
a home office because of a use described in 
paragraphs (1), (2), or (4) of this subsection, 
notwithstanding the limitations of paragraph 
(5), such individual may elect to use the stand-
ard home office deduction for the taxable year. 
‘‘(B) STANDARD
HOME
OFFICE
DEDUC-
TION
AMOUNT.—For purposes of this para-
graph, the standard home office deduction is 
the lesser of— 
‘‘(i) $2,500, or 
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‘‘(ii) the gross income derived from 
the individual’s trade or business for which 
such use occurs.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 6. INCREASE AND OTHER MODIFICATIONS IN CHILD 
TAX CREDIT MADE PERMANENT. 
(a) IN GENERAL.—Title IX of the Economic Growth 
and Tax Relief Reconciliation Act of 2001 shall not apply 
to the amendments made by section 201 of such Act (re-
lating to modifications to child tax credit). 
(b) CREDIT AMOUNT ADJUSTED FOR INFLATION.— 
Section 24 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new sub-
section: 
‘‘(g) INFLATION ADJUSTMENT.—In the case of any 
taxable year beginning in a calendar year after 2007, the 
$1,000 amount contained in subsection (a) shall be in-
creased by an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by substituting 
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‘calendar year 2006’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
Any increase determined under the preceding sentence 
shall be rounded to the nearest multiple of $50.’’. 
SEC. 7. TELECOMMUTING TAX CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45O. TELECOMMUTING CREDIT. 
‘‘(a) DETERMINATION OF AMOUNT.—For purposes of 
section 38, the amount of the telecommuting credit deter-
mined under this section for the taxable year shall be 
equal to 40 percent of the qualified first-year teleworking 
wages paid or incurred during such year. 
‘‘(b) 
QUALIFIED
FIRST-YEAR
TELEWORKING 
WAGES.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified first- 
year teleworking wages’ means, with respect to any 
individual, wages attributable to service rendered 
during the first teleworking year with respect to 
such individual. 
‘‘(2) FIRST
TELEWORKING
YEAR.—The term 
‘first teleworking year’ means, with respect to any 
individual employed by an employer, the first 1-year 
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