PACE Act

Bill: 114-s-3233
Sponsor: full_name: Sen. King, Angus S., Jr. [I-ME]
Introduced: 2016-07-14
Policy area: Taxation
Subjects: Child care and development

Employee benefits and pensions

Income tax credits

Income tax exclusion

Inflation and prices
Latest action: action_date: 2016-07-14
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2016-07-14
action_desc: Introduced in Senate
text: <p><b>Promoting Affordable Childcare for Everyone Act or the PACE Act </b></p> <p>This bill amends the Internal Revenue Code, with respect to the tax credit for expenses for household and dependent care services necessary for gainful employment (known as the Child and Dependent Care Tax Credit), to: (1) make the credit refundable, (2) increase the rate for the credit, and (3) require the dollar amounts for such credit to be adjusted for inflation after 2016. </p> <p>The bill also increases the amount of employer-provided dependent care assistance which may be excluded from the gross income of an employee and requires the increased exclusion amount to be adjusted for inflation after 2017. </p>

tv_txt: II 114th CONGRESS 2d Session S. 3233 IN THE SENATE OF THE UNITED STATES July 14, 2016 Mr. King (for himself and Mr. Burr ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to make the Child and Dependent Care Tax Credit fully refundable, and for other purposes.

1. Short title This Act may be cited as the Promoting Affordable Childcare for Everyone Act or the PACE Act . 2. Refundability of Child and Dependent Care Tax Credit (a) In general The Internal Revenue Code of 1986 is amended— (1) by redesignating section 21 as section 36C, and (2) by moving section 36C, as so redesignated, from subpart A of part IV of subchapter A of chapter 1 to the location immediately before section 37 in subpart C of part IV of subchapter A of chapter 1. (b) Technical amendments (1) Paragraph (1) of section 23(f) of the Internal Revenue Code of 1986 is amended by striking 21(e) and inserting 36C(e) . (2) Paragraph (6) of section 35(g) of such Code is amended by striking 21(e) and inserting 36C(e) . (3) Paragraph (1) of section 36C(a) of such Code (as redesignated by subsection (a)) is amended by striking this chapter and inserting this subtitle . (4) Subparagraph (C) of section 129(a)(2) of such Code is amended by striking section 21(e) and inserting section 36C(e) . (5) Paragraph (2) of section 129(b) of such Code is amended by striking section 21(d)(2) and inserting section 36C(d)(2) . (6) Paragraph (1) of section 129(e) of such Code is amended by striking section 21(b)(2) and inserting section 36C(b)(2) . (7) Subsection (e) of section 213 of such Code is amended by striking section 21 and inserting section 36C . (8) Subparagraph (H) of section 6213(g)(2) of such Code is amended by striking section 21 and inserting section 36C . (9) Subparagraph (L) of section 6213(g)(2) of such Code is amended by striking section 21, 24, or 32, and inserting section 24, 32, or 36C, . (10) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C, after 36B, . (11) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following: Sec. 36C. Expenses for household and dependent care services necessary for gainful employment. . (12) The table of sections for subpart A of such part IV is amended by striking the item relating to section 21. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016. 3. Enhancement of the Child and Dependent Care Tax Credit (a) In general Section 36C of the Internal Revenue Code of 1986, as redesignated by section 2 of this Act, is amended— (1) in paragraph (1) of subsection (a), by striking 35 percent reduced (but not below 20 percent) and inserting 50 percent reduced (but not below 35 percent) , (2) by redesignating subsection (f) as subsection (g), and (3) by inserting after subsection (e) the following new subsection: (f) Inflation adjustment (1) In general In the case of any taxable year beginning after 2016, each of the dollar amounts in subsections (a)(2) and (c) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) 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 2015 for calendar year 1992 in subparagraph (B) thereof. (2) Rounding If any increase determined under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016. 4. Increase in exclusion for employer-provided dependent care assistance (a) In general Subparagraph (A) of section 129(a)(2) of the Internal Revenue Code of 1986 (relating to dependent care assistance programs) is amended by striking $5,000 ($2,500 and inserting $7,500 (half such dollar amount . (b) Inflation adjustment Paragraph (2) of section 129(a) of such Code is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph: (C) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2017, the $7,500 amount in subparagraph (A) 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. Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $100. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2016.