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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Working Families Relief Act''.

SEC. 2. EXPANSION OF EXCLUSION FOR DEPENDENT CARE ASSISTANCE PROGRAMS.

(a) Expansion.--
(1) In general.--Subparagraph (A) of section 129(a)(2) of
the Internal Revenue Code of 1986 is amended by striking
''shall not exceed $5,000 ($2,500 in the case of a separate
return by a married individual).'' and inserting ''shall not
exceed--
''(i) except as provided in clause (ii),
$10,500, and
''(ii) in the case of a separate return by
a married individual, /2\ the amount in
effect under clause (i).''.
(2) Inflation adjustment.--Paragraph (2) of section 129(a)
of such Code is amended by adding at the end the following new
subparagraph:
''(D) Adjustment for inflation.--In the case of
taxable years beginning after December 31, 2017, the
$10,500 amount under subparagraph (A)(i) 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.
If any amount as adjusted under the preceding sentence
is not a multiple of $100, such amount shall be rounded
to the next lowest multiple of $100.''.
(b) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred in taxable years beginning after
December 31, 2016.

SEC. 3. ALLOWANCE OF CREDIT FOR SMALL EMPLOYER DEPENDENT CARE
ASSISTANCE PROGRAM START-UP COSTS.

(a) In General.--Section 45E of the Internal Revenue Code of 1986
is amended--
(1) by striking ''pension plan'' in subsection (a) and
inserting ''employee benefit'', and
(2) by adding at the end the following new subsection:
''(f) Application to Dependent Care Assistance Programs.--For
purposes of this section--
''(1) an dependent care assistance program of an eligible
employer which meets the requirements of section 129(d) shall
be treated as an eligible employer plan, and
''(2) this section (including the limitation under
subsection (b)) shall be applied separately with respect to any
such dependent care assistance program of the eligible employer
and other eligible employer plans of such eligible employer.''.
(b) Conforming Amendments.--
(1) Section 38(b)(14) of the Internal Revenue Code of 1986
is amended by striking ''pension plan'' and inserting
''employee benefit''.
(2) The heading for section 45E of such Code is amended by
striking ''pension plan'' and inserting ''employee benefit''.
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by striking
''pension plan'' in the item relating to section 45E and
inserting ''employee benefit''.
(c) Effective Date.--The amendments made by this section shall
apply to costs paid or incurred in taxable years beginning after
December 31, 2016, with respect to dependent care assistance programs
first effective after such date.

SEC. 4. CREDIT FOR MATCHING DEPENDENT CARE ASSISTANCE PROGRAM
CONTRIBUTIONS BY EMPLOYERS.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 45R the following new section:

''SEC. 45S. CREDIT FOR EMPLOYER DEPENDENT CARE ASSISTANCE PROGRAM
MATCHING CONTRIBUTIONS.

''(a) In General.--For purposes of section 38, the employer
dependent care assistance matching contribution credit determined under
this section for any taxable year is an amount equal to the lesser of--
''(1) the amount of contributions made by the employer with
respect to employees to a dependent care assistance program
that meets the requirements of section 129(d), or
''(2) the amount of contributions to such dependent care
assistance program elected by such employees under a cafeteria
plan of the employer to which section 125 applies.
''(b) Limitation.--The credit allowed under subsection (a) for any
taxable year with respect to any employee shall not exceed $1,000.
''(c) Definitions.--Any term used in this section which is used in
section 129 shall have the meaning given such term under section
129.''.
(b) Conforming Amendments.--
(1) Section 38(b) of the Internal Revenue Code of 1986 is
amended by striking ''plus'' at the end of paragraph (35), by
striking the period at the end of paragraph (36) and inserting
'', plus'', and by adding at the end the following new
paragraph:
''(37) the employer dependent care assistance matching
contribution credit determined under section 45S(a).''.
(2) The table of sections for subpart D 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 45R
the following new item:

''Sec. 45S. Credit for employer dependent care assistance program
matching contributions.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
Working Families Relief Act This bill amends the Internal Revenue Code to increase and expand tax incentives for employer-provided dependent care assistance. The bill increases the limit on the amount excludible from the gross income of an employee for employer-provided dependent care assistance and requires annual inflation adjustments to such increased limit after 2017. The bill also establishes tax credits for: (1) small employer dependent care assistance program start-up costs, and (2) employer matching contributions for dependent care assistance programs.