Title: Improving Diaper Affordability Act of 2020
Policy area: Taxation

Summary:
Improving Diaper Affordability Act of 2020
This bill includes diapers as deductible medical expenses and allows payments for diapers from certain tax-preferred spending and reimbursement accounts. The bill prohibits state or local governments from imposing a sales tax on the retail purchase of diapers.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8394 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 8394

    To amend the Internal Revenue Code of 1986 to treat diapers as 
     qualified medical expenses; and to prohibit States and local 
       governments to impose a tax on the retail sale of diapers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 24, 2020

     Mrs. Watson Coleman (for herself, Ms. DeLauro, and Ms. Lee of 
 California) introduced the following bill; which was referred to the 
 Committee on Ways and Means, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to treat diapers as 
     qualified medical expenses; and to prohibit States and local 
       governments to impose a tax on the retail sale of diapers.

    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 ``Improving Diaper Affordability Act 
of 2020''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) One in 3 families with infants and toddlers struggles 
        to provide the diapers their children need.
            (2) Low-income families with infants spend 14 percent of 
        their income on diapers alone, which is roughly $936 per child, 
        per year.
            (3) Low-income families spend twice as much on diapers for 
        their children, compared to families who have the means to buy 
        diapers in bulk at a lower price.
            (4) More than 5 million children under the typical potty 
        training age of 3-years-old live in low-income families.
            (5) Diaper need affects not only the health and well-being 
        of the child but it can affect the economic security of the 
        entire family.
            (6) Over half of families in diaper need who rely on child 
        care in order to go to work or school, missed work or school in 
        the preceding month because they did not have the diapers they 
        needed to put their child in child care.
            (7) No State or Federal child safety-net program allocates 
        dollars specifically for the purchase of diapers.
            (8) Since the start of the COVID-19 pandemic, diaper banks 
        around the country have experienced double, triple, or greater 
        increase in demand for diapers due to the pandemic and economic 
        shutdown.

SEC. 3. INCLUSION OF DIAPERS AS QUALIFIED MEDICAL EXPENSES.

    (a) Health Savings Accounts.--Section 223(d)(2) of the Internal 
Revenue Code of 1986 is amended by adding at the end of subparagraph 
(A) the following: ``Notwithstanding the preceding sentence, amounts 
paid for diapers shall be treated as paid for medical care.''.
    (b) Archer MSAs.--Section 220(d)(2)(A) of such Code is amended by 
adding at the end the following: ``Notwithstanding the preceding 
sentence, amounts paid for diapers shall be treated as paid for medical 
care.''.
    (c) Health Flexible Spending Arrangements and Health Reimbursement 
Arrangements.--Section 106 of such Code is amended by adding at the end 
the following new subsection:
    ``(f) Reimbursements for Diapers.--For purposes of this section and 
section 105, expenses incurred for diapers shall be treated as incurred 
for medical care.''.
    (d) Dependent Care Assistance and Dependent Care Flexible Spending 
Arrangements.--Section 129(e)(1) of such Code is amended by adding at 
the end the following: ``Such term shall include expenses incurred for 
diapers.''.
    (e) Limited Purpose Flexible Spending Arrangements and 
Reimbursement Arrangements.--Section 223(c)(1)(B) of such Code is 
amended by striking ``and'' at the end of clause (ii), by striking the 
period at the end of clause (iii) and inserting ``, and'', and by 
adding at the end the following new clause:
                            ``(iv) coverage under a flexible spending 
                        arrangement, or health reimbursement 
                        arrangement, that pays or reimburses for 
                        coverage described in clause (ii) (other than 
                        long-term care services and, in the case of a 
                        flexible spending arrangement, other than 
                        through insurance). Coverage shall not fail to 
                        be treated as coverage described in the 
                        preceding sentence solely by reason of paying 
                        or reimbursing expenses incurred for 
                        diapers.''.
    (f) Effective Dates.--
            (1) Distributions from health savings accounts.--The 
        amendments made by subsections (a) and (b) shall apply to 
        amounts paid after December 31, 2019.
            (2) Reimbursements.--The amendment made by subsection (c) 
        and (d) shall apply to expenses incurred after December 31, 
        2019.
            (3) Limited purpose hsa and hra.--The amendments made by 
        subsection (e) shall apply to months beginning after December 
        31, 2019.

SEC. 4. PROHIBITION OF RETAIL SALES TAXES.

    A State, or unit of local government of a State, may not impose a 
sales tax on the retail purchase of diapers.
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