Title: 21st Century Child Care Investment Act
Policy area: Taxation

Summary:
21st Century Child Care Investment Act
This bill amends the Internal Revenue Code to allow a tax credit for employment-related expenses for services provided by a high quality child care center.
The credit applies to taxpayers with adjusted gross incomes below specified levels and is limited to: (1) $14,000 for each qualifying child who is under the age of three by the end of the year; and (2) $5,000 for each qualifying child who has attained the age of three by the end of the year, with adjustments for inflation after 2017. A "qualifying child" is a dependent who is under the age of five.
The care must be provided by a facility that: (1) receives a fee, payment, or grant for providing care for children (other than just children who reside at the facility and regardless of whether such facility is operated for profit); and (2) meets state licensing requirements.
For taxable years beginning more than five years after enactment of this bill, the facility must also: (1) meet high quality rating requirements under the quality rating and improvement system of the state in which the care is provided, and (2) be certified by the Department of Health and Human Services.
A portion of the high quality child care tax credit is refundable, depending on the adjusted gross income of the taxpayer. The Department of the Treasury must establish a program to, at the election of the taxpayer, make monthly advance payments of the credit directly to a high quality child care center.
The bill also makes a portion of the dependent care tax credit refundable.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1466 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 1466

 To amend the Internal Revenue Code of 1986 to provide a high quality 
             child care tax credit, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 2017

 Ms. Clark of Massachusetts (for herself, Mr. Nolan, Ms. Sanchez, Ms. 
Lee, Mr. Swalwell of California, Mr. DeSaulnier, Ms. Norton, Mr. Rush, 
Mr. Ellison, Mr. Soto, and Mr. Cleaver) 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 provide a high quality 
             child care tax credit, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``21st Century Child Care Investment 
Act''.

SEC. 2. HIGH QUALITY CHILD CARE TAX CREDIT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting before 
section 26 the following new section:

``SEC. 25E. HIGH QUALITY CHILD CARE CREDIT.

    ``(a) In General.--In the case of an individual who elects the 
application of this section for the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter an amount 
equal to the applicable amount of high quality child care expenses paid 
by such individual during the taxable year with respect to a qualifying 
child.
    ``(b) Limitation.--
            ``(1) In general.--The amount of the high quality child 
        care expenses which may be taken into account under subsection 
        (a) with respect to each qualifying child of the taxpayer shall 
        not exceed--
                    ``(A) $14,000 for each qualifying child who has not 
                attained the age of 3 by the end of the taxable year, 
                and
                    ``(B) $5,000 for each qualifying child who has 
                attained the age of 3 by the end of the taxable year.
            ``(2) Adjusted gross income limitation.--The dollar 
        limitation under paragraph (1)--
                    ``(A) shall be zero under subparagraph (A) thereof 
                in the case of a taxpayer whose adjusted gross income 
                for the taxable year exceeds an amount equal to 400 
                percent of the poverty line, and
                    ``(B) shall be zero under subparagraph (B) thereof 
                in the case of a taxpayer whose adjusted gross income 
                for the taxable year exceeds an amount equal to 200 
                percent of the poverty line.
    ``(c) Portion of Credit Refundable.--
            ``(1) In general.--The aggregate credits allowed to a 
        taxpayer under subpart C shall be increased by the difference 
        of--
                    ``(A) the credit which would be allowed under this 
                section without regard to this subsection and the 
                limitation under section 26(a), over
                    ``(B) the taxpayer's applicable family 
                contribution.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under this subpart and shall 
        reduce the amount of credit otherwise allowable under 
        subsection (a) without regard to section 26(a).
            ``(2) Applicable family contribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The taxpayer's applicable family 
                contribution for a taxable year shall be the sum of the 
                amounts determined under subparagraph (B) with respect 
                to each qualifying child of the taxpayer for which high 
                quality child care expenses are taken into account 
                under this section for the taxable year.
                    ``(B) Amounts determined.--The amount with respect 
                to a qualifying child under this subparagraph shall be 
                determined as follows:
                            ``(i) In the case of a qualifying child who 
                        has not attained age 3:

``If the taxpayer's adjusted                                           
  gross income for the                                                 
  taxable year is the following                  Multiply such adjusted
  percentage of the poverty line:                      gross income by:
        Not more than 133 percent....................        2 percent 
        More than 133 percent but not more than 150          6 percent 
            percent.
        More than 150 percent but not more than 200          8 percent 
            percent.
        More than 200 percent but not more than 250         10 percent 
            percent.
        More than 250 percent........................       12 percent.
                            ``(ii) In the case of a qualifying child 
                        who has attained age 3:

``If the taxpayer's adjusted                                           
  gross income for the                                                 
  taxable year is the following                  Multiply such adjusted
  percentage of the poverty line:                      gross income by:
        Not more than 133 percent....................        2 percent 
        More than 133 percent but not more than 150          6 percent 
            percent.
        More than 150 percent but not more than 200          8 percent.
            percent.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualifying child.--The term `qualifying child' means 
        a dependent of the taxpayer (as defined in section 152(a)(1)) 
        who has not attained age 5.
            ``(2) High quality child care expenses.--
                    ``(A) In general.--The term `high quality child 
                care expenses' means employment-related expenses (as 
                defined in section 21(b)(2)(A)) for services provided 
                by a high quality child care center.
                    ``(B) High quality child care center.--The term 
                `high quality child care center' means any facility, 
                including family child care homes, which--
                            ``(i) receives a fee, payment, or grant for 
                        providing care for qualified children (other 
                        than just children who reside at the facility 
                        and regardless of whether such facility is 
                        operated for profit),
                            ``(ii) meets the State licensing 
                        requirements for providing care to qualified 
                        children, and
                            ``(iii) in the case of taxable years 
                        beginning more than 5 years after the date of 
                        the enactment of this section--
                                    ``(I) meets the high quality rating 
                                requirements under the quality rating 
                                and improvement system of the State 
                                within which the care of the qualifying 
                                child is provided, or
                                    ``(II) is certified by the 
                                Secretary of Health and Human Services 
                                under such standards as the Secretary 
                                of Health and Human Services, in 
                                consultation with the Secretary, shall 
                                by regulation prescribe.
                    ``(C) Quality rating and improvement system.--The 
                term `quality rating and improvement system' means a 
                system through which a State uses a set of 
                progressively higher program standards to evaluate the 
                quality of an early childhood program and to support 
                program improvement. Any such program shall include the 
                following:
                            ``(i) Tiered Program Standards with 
                        multiple rating categories that clearly and 
                        meaningfully differentiate program quality 
                        levels.
                            ``(ii) Monitoring to evaluate program 
                        quality based on the program standards 
                        determined by the State.
                            ``(iii) Support to help programs and the 
                        child care workforce meet progressively higher 
                        standards (including through training, 
                        technical assistance, and financial support, 
                        and facilitating participation in organizations 
                        that foster professional development).
                            ``(iv) Program quality ratings that are 
                        publically available and a process for 
                        validating the system.
                    ``(D) High quality rating requirement.--
                            ``(i) In general.--A facility shall be 
                        treated as meeting the high quality rating 
                        requirements of a State's quality rating and 
                        improvement system if the facility is rated in 
                        the top tier by a State with a 3-tier rating 
                        system or in the top 2 tiers by a State with a 
                        4- or 5-tier rating system. A facility shall 
                        not be treated as meeting the requirements of 
                        the preceding sentence unless the State's 
                        rating system includes compensation standards 
                        updated at least every 3 years under the study 
                        required under clause (ii).
                            ``(ii) Study on the cost of high quality 
                        child care.--A State shall not be treated as 
                        having a rating system for purposes of clause 
                        (i) unless the State conducts a study on the 
                        cost of high quality child care at least once 
                        every 3 years to analyze costs associated with 
                        delivering high quality child care including--
                                    ``(I) an assessment of the 
                                compensation levels sufficient to 
                                recruit and retain a qualified and 
                                diverse child care workforce and allow 
                                entry-level child care staff to 
                                maintain a secure standard of living 
                                and meet their families' essential 
                                needs, and
                                    ``(II) information gathered through 
                                a public hearing to solicit input from 
                                relevant stakeholders including the 
                                child care workforce.
            ``(3) Poverty line.--
                    ``(A) In general.--The term `poverty line' has the 
                meaning given such term in section 673(2) of the 
                Community Services Block Grant Act (42 U.S.C. 9902(2)), 
                including any revision required by such section. The 
                poverty line determined with respect to taxpayer shall 
                be the poverty line for a family of the size involved.
                    ``(B) Family size.--The family size involved with 
                respect to any taxpayer shall be equal to the number of 
                individuals for whom the taxpayer is allowed a 
                deduction under section 151 (relating to allowance of 
                deduction for personal exemptions) for the taxable 
                year.
    ``(e) Special Rules.--
            ``(1) Advance payment program.--
                    ``(A) In general.--The Secretary of the Treasury, 
                in consultation with the Secretary of Health and Human 
                Services, shall establish a program--
                            ``(i) to make advance determinations with 
                        respect to the eligibility of individuals for 
                        the credit allowed under this section, and
                            ``(ii) to make monthly advance payments of 
                        the credit allowed under this section, at the 
                        election of the taxpayer, directly to a high 
                        quality child care center providing care for a 
                        qualifying child of the taxpayer.
                    ``(B) Reconciliation of credit and advance 
                payment.--
                            ``(i) In general.--The amount of the credit 
                        allowed under this section for any taxable year 
                        shall be reduced (but not below zero) by the 
                        amount of any advance payment of such credit 
                        under subparagraph (A).
                            ``(ii) Excess advance payments.--If the 
                        advance payments to a taxpayer under 
                        subparagraph (A) for a taxable year exceed the 
                        credit allowed by this section (determined 
                        without regard to subparagraph (A)), the tax 
                        imposed by this chapter for the taxable year 
                        shall be increased by the amount of such 
                        excess.
                            ``(iii) Limitation on increase.--
                                    ``(I) In general.--In the case of a 
                                taxpayer whose tax is increased 
                                (determined without regard to this 
                                clause) for the taxable year under 
                                clause (ii) with respect to a qualified 
                                child, such increase shall not exceed 
                                the applicable dollar amount determined 
                                in accordance with the table under 
                                subclause (I) in the case of any 
                                portion of the credit determined with 
                                respect to a qualifying child who has 
                                not attained the age of 3 by the end of 
                                the taxable year, and in accordance 
                                with the table under subclause (II) in 
                                the case of any portion of the credit 
                                determined with respect to a qualifying 
                                child who has attained the age of 3 by 
                                the end of the taxable year.
                                    ``(II) Under age 3.--The table 
                                under this subclause is as follows:

``If the adjusted gross income                                         
  (expressed as a percent                        The applicable dollar 
  of poverty line) is:                                       amount is:
        Less than 400 percent..............................        600 
        At least 400 percent but less than 500 percent.....      1,500 
        At least 500 percent but less than 600 percent.....      2,500.
                                    ``(III) Age 3 and 4.--The table 
                                under this subclause is as follows:

``If the adjusted gross income                                         
  (expressed as a percent                        The applicable dollar 
  of poverty line) is:                                       amount is:
        Less than 200 percent..............................        600 
        At least 200 percent but less than 300 percent.....      1,500 
        At least 300 percent but less than 400 percent.....      2,500.
                    ``(C) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning after 2017, the dollar 
                        amounts in subsection (b)(1) shall be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost of living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins determined by 
                                substituting `calendar year 2016' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding.--If the dollar amount in 
                        subsection (b)(1), after being increased under 
                        clause (i), is not a multiple of $100, such 
                        amount shall be rounded to the next lowest 
                        multiple of $100.
            ``(2) Information requirements.--Each high quality child 
        care center which receives payments from the Secretary under 
        paragraph (1) shall for each calendar year provide the 
        following information to the Secretary and to the taxpayer with 
        respect to the child for which such payments were made:
                    ``(A) The total cost of care for such child for 
                such year (determined without regard to the credit 
                under this section).
                    ``(B) The aggregate amount of any advance payment 
                of such credit made with respect to such child.
                    ``(C) The name, address, age, and TIN of the 
                taxpayer and the child.
                    ``(D) Any information provided to such person 
                necessary to determine eligibility for, and the amount 
                of, such credit.
            ``(3) Coordination with other dependent care provisions.--
                    ``(A) Dependent care credit.--No credit shall be 
                allowed under section 21 for any taxable year for which 
                the taxpayer elects the application of this section.
                    ``(B) Dependent care programs.--The amount taken 
                into account under subsection (a) with respect to a 
                qualifying child shall be reduced by the aggregate 
                amount excludable from gross income under section 129 
                for the taxable year with respect to such child.
            ``(4) Rules relating to marriage and payments to related 
        individuals.--Rules similar to the rules of paragraphs (2), 
        (3), (4), and (6) of section 21(e) shall apply for purposes of 
        this section.''.
    (b) Conforming Amendment.--Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ``25E,'' after ``25A,''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting before the item relating to section 26 the following new 
item:

``Sec. 25E. High quality child care credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.

SEC. 3. PORTION OF DEPENDENT CARE CREDIT MADE REFUNDABLE.

    (a) In General.--Section 21 of the Internal Revenue Code of 1986 is 
amended by redesignating subsection (f) as subsection (g) and by 
inserting after subsection (e) the following new subsection:
    ``(f) Portion of Credit Refundable.--The aggregate credits allowed 
to a taxpayer under subpart C shall be increased by the lesser of--
            ``(1) the credit which would be allowed under this section 
        without regard to this subsection and the limitation under 
        section 26(a), or
            ``(2)(A) in the case of a taxpayer with 1 qualifying child, 
        $1,050, or
            ``(B) in the case of a taxpayer with more than 1 qualifying 
        child, $2,100.
The amount of the credit allowed under this subsection shall not be 
treated as a credit allowed under this subpart and shall reduce the 
amount of credit otherwise allowable under subsection (a) without 
regard to section 26(a).''.
    (b) Clerical Amendment.--Section 1324(b)(2) of title 31, United 
States Code, is amended by inserting ``24,'' before ``25A,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.
                                 <all>