Child and Dependent Care Tax Credit Enhancement Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 927 To amend the Internal Revenue Code of 1986 to enhance the Child and Dependent Care Tax Credit and make the credit fully refundable. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 8, 2021 Mr. DANNY K. DAVIS of Illinois (for himself and Ms. DELBENE) 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 enhance the Child and Dependent Care Tax Credit and make the credit fully refundable. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Child and Dependent 4 Care Tax Credit Enhancement Act of 2021’’. 5 SEC. 2. ENHANCEMENT OF CHILD AND DEPENDENT CARE 6 TAX CREDIT. 7 (a) IN GENERAL.—Paragraph (2) of section 21(a) of 8 the Internal Revenue Code of 1986 is amended to read 9 as follows: 10 VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 927 IH ‘‘(2) APPLICABLE PERCENTAGE.— 1 ‘‘(A) IN GENERAL.—For purposes of para- 2 graph (1), the term ‘applicable percentage’ 3 means 50 percent reduced (but not below the 4 phaseout percentage) by 1 percentage point for 5 each $2,000 (or fraction thereof) by which the 6 taxpayer’s adjusted gross income for the taxable 7 year exceeds $125,000. 8 ‘‘(B) PHASEOUT PERCENTAGE.—For pur- 9 poses of subparagraph (A), the term ‘phaseout 10 percentage’ means 20 percent reduced (but not 11 below zero) by 1 percentage point for each 12 $2,000 (or fraction thereof) by which the tax- 13 payer’s adjusted gross income for the taxable 14 year exceeds $400,000.’’. 15 (b) INCREASE IN DOLLAR LIMIT ON AMOUNT CRED- 16 ITABLE.—Subsection (c) of section 21 of the Internal Rev- 17 enue Code of 1986 is amended— 18 (1) in paragraph (1), by striking ‘‘$3,000’’ and 19 inserting ‘‘$8,000’’; and 20 (2) in paragraph (2), by striking ‘‘$6,000’’ and 21 inserting ‘‘$16,000’’. 22 (c) SPECIAL RULE FOR MARRIED COUPLES FILING 23 SEPARATE RETURNS.—Paragraph (2) of section 21(e) of 24 VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 927 IH the Internal Revenue Code of 1986 is amended to read 1 as follows: 2 ‘‘(2) MARRIED COUPLES FILING SEPARATE RE- 3 TURNS.— 4 ‘‘(A) IN GENERAL.—In the case of married 5 individuals who do not file a joint return for the 6 taxable year— 7 ‘‘(i) the applicable percentage under 8 subsection (a)(2) and the number of quali- 9 fying individuals and aggregate amount ex- 10 cludable under section 129 for purposes of 11 subsection (c) shall be determined with re- 12 spect to each such individual as if the indi- 13 vidual had filed a joint return with the in- 14 dividual’s spouse, and 15 ‘‘(ii) the aggregate amount of the 16 credits allowed under this section for such 17 taxable year with respect to both spouses 18 shall not exceed the amount which would 19 have been allowed under this section if the 20 individuals had filed a joint return. 21 ‘‘(B) REGULATIONS.—The Secretary shall 22 prescribe such regulations or other guidance as 23 is necessary to carry out the purposes of this 24 subsection.’’. 25 VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 927 IH (d) ADJUSTMENT FOR INFLATION.—Section 21 of 1 the Internal Revenue Code of 1986 is amended— 2 (1) by redesignating subsection (f) as sub- 3 section (g); and 4 (2) by inserting after subsection (e) the fol- 5 lowing new subsection: 6 ‘‘(f) INFLATION ADJUSTMENT.— 7 ‘‘(1) IN GENERAL.—In the case of a calendar 8 year beginning after 2022, the $125,000 amount in 9 paragraph (2) of subsection (a) and the dollar 10 amounts in subsection (c) shall each be increased by 11 an amount equal to— 12 ‘‘(A) such dollar amount, multiplied by 13 ‘‘(B) the cost-of-living adjustment deter- 14 mined under section 1(f)(3) for the calendar 15 year in which the taxable year begins, deter- 16 mined by substituting ‘calendar year 2021’ for 17 ‘calendar year 2016’ in subparagraph (A)(ii) 18 thereof. 19 ‘‘(2) ROUNDING.—If any dollar amount, after 20 being increased under paragraph (1), is not a mul- 21 tiple of $100, such dollar amount shall be rounded 22 to the next lowest multiple of $100.’’. 23 (e) CREDIT TO BE REFUNDABLE.— 24 VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 927 IH (1) IN GENERAL.—The Internal Revenue Code 1 of 1986 is amended— 2 (A) by redesignating section 21 as section 3 36C; and 4 (B) by moving section 36C, as so redesig- 5 nated, from subpart A of part IV of subchapter 6 A of chapter 1 to the location immediately be- 7 fore section 37 in subpart C of part IV of sub- 8 chapter A of chapter 1. 9 (2) TECHNICAL AMENDMENTS.— 10 (A) Paragraph (1) of section 23(f) of the 11 Internal Revenue Code of 1986 is amended by 12 striking ‘‘21(e)’’ and inserting ‘‘36C(e)’’. 13 (B) Paragraph (6) of section 35(g) of such 14 Code is amended by striking ‘‘21(e)’’ and in- 15 serting ‘‘36C(e)’’. 16 (C) Paragraph (1) of section 36C(a) of 17 such Code (as redesignated by paragraph (1)) 18 is amended by striking ‘‘this chapter’’ and in- 19 serting ‘‘this subtitle’’. 20 (D) Subparagraph (C) of section 129(a)(2) 21 of such Code is amended by striking ‘‘section 22 21(e)’’ and inserting ‘‘section 36C(e)’’. 23 VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 927 IH (E) Paragraph (2) of section 129(b) of 1 such Code is amended by striking ‘‘section 2 21(d)(2)’’ and inserting ‘‘section 36C(d)(2)’’. 3 (F) Paragraph (1) of section 129(e) of 4 such Code is amended by striking ‘‘section 5 21(b)(2)’’ and inserting ‘‘section 36C(b)(2)’’. 6 (G) Subsection (e) of section 213 of such 7 Code is amended by striking ‘‘section 21’’ and 8 inserting ‘‘section 36C’’. 9 (H) Subparagraph (H) of section 10 6213(g)(2) of such Code is amended by striking 11 ‘‘section 21’’ and inserting ‘‘section 36C’’. 12 (I) Subparagraph (L) of section 13 6213(g)(2) of such Code is amended by striking 14 ‘‘section 21, 24, or 32,’’ and inserting ‘‘section 15 24, 32, or 36C,’’. 16 (J) Paragraph (2) of section 1324(b) of 17 title 31, United States Code, is amended by in- 18 serting ‘‘36C,’’ after ‘‘36B,’’. 19 (K) The table of sections for subpart C of 20 part IV of subchapter A of chapter 1 of the In- 21 ternal Revenue Code of 1986 is amended by in- 22 serting after the item relating to section 36B 23 the following: 24 ‘‘Sec. 36C. Expenses for household and dependent care services necessary for gainful employment.’’. VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6211 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 927 IH (L) The table of sections for subpart A of 1 such part IV is amended by striking the item 2 relating to section 21. 3 (f) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to taxable years beginning after 5 December 31, 2021. 6 Æ VerDate Sep 11 2014 22:41 Mar 04, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H927.IH H927 kjohnson on DSK79L0C42PROD with BILLS