Right Start Child Care and Education Act of 2019

II 116TH CONGRESS 1ST SESSION S. 137 To amend the Internal Revenue Code of 1986 to increase the credit for employers establishing workplace child care facilities, to increase the child care credit to encourage greater use of quality child care services, to provide incentives for students to earn child care-related degrees and to work in child care facilities, and to increase the exclusion for employer-provided dependent care assistance. IN THE SENATE OF THE UNITED STATES JANUARY 16, 2019 Mrs. SHAHEEN (for herself, Mrs. GILLIBRAND, Ms. KLOBUCHAR, and Mr. SCHATZ) 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 increase the credit for employers establishing workplace child care facilities, to increase the child care credit to encourage greater use of quality child care services, to provide incentives for students to earn child care-related degrees and to work in child care facilities, and to increase the exclusion for employer-provided dependent care as- sistance. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 2 •S 137 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Right Start Child Care 2 and Education Act of 2019’’. 3 SEC. 2. INCREASE IN EMPLOYER-PROVIDED CHILD CARE 4 CREDIT. 5 (a) INCREASE IN CREDITABLE PERCENTAGE OF 6 CHILD CARE EXPENDITURES.—Paragraph (1) of section 7 45F(a) of the Internal Revenue Code of 1986 is amended 8 by striking ‘‘25 percent’’ and inserting ‘‘35 percent’’. 9 (b) INCREASE IN CREDITABLE PERCENTAGE OF RE- 10 SOURCE AND REFERRAL EXPENDITURES.—Paragraph (2) 11 of section 45F(a) of the Internal Revenue Code of 1986 12 is amended by striking ‘‘10 percent’’ and inserting ‘‘20 13 percent’’. 14 (c) INCREASE IN MAXIMUM CREDIT.—Subsection (b) 15 of section 45F of the Internal Revenue Code of 1986 is 16 amended by striking ‘‘$150,000’’ and inserting 17 ‘‘$225,000’’. 18 (d) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to taxable years beginning after 20 December 31, 2018. 21 SEC. 3. INCREASE IN DEPENDENT CARE CREDIT. 22 (a) INCREASE IN INCOMES ELIGIBLE FOR FULL 23 CREDIT.—Paragraph (2) of section 21(a) of the Internal 24 Revenue Code of 1986 is amended by striking ‘‘$15,000’’ 25 and inserting ‘‘$30,000’’. 26 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 3 •S 137 IS (b) INCREASE IN PERCENTAGE OF EXPENSES AL- 1 LOWABLE.—Paragraph (2) of section 21(a) of the Internal 2 Revenue Code of 1986 is amended— 3 (1) by striking ‘‘35 percent’’ and inserting ‘‘50 4 percent’’, and 5 (2) by striking ‘‘20 percent’’ and inserting ‘‘35 6 percent’’. 7 (c) INCREASE IN DOLLAR LIMIT ON AMOUNT CRED- 8 ITABLE.—Subsection (c) of section 21 of the Internal Rev- 9 enue Code of 1986 is amended— 10 (1) by striking ‘‘$3,000’’ in paragraph (1) and 11 inserting ‘‘$6,000’’, and 12 (2) by striking ‘‘$6,000’’ in paragraph (2) and 13 inserting ‘‘$12,000’’. 14 (d) CREDIT TO BE REFUNDABLE.— 15 (1) IN GENERAL.—The Internal Revenue Code 16 of 1986 is amended— 17 (A) by redesignating section 21 as section 18 36C, and 19 (B) by moving section 36C, as so redesig- 20 nated, from subpart A of part IV of subchapter 21 A of chapter 1 to the location immediately be- 22 fore section 37 in subpart C of part IV of sub- 23 chapter A of chapter 1. 24 (2) TECHNICAL AMENDMENTS.— 25 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 4 •S 137 IS (A) Paragraph (1) of section 23(f) of such 1 Code is amended by striking ‘‘21(e)’’ and in- 2 serting ‘‘36C(e)’’. 3 (B) Paragraph (6) of section 35(g) of such 4 Code is amended by striking ‘‘21(e)’’ and in- 5 serting ‘‘36C(e)’’. 6 (C) Paragraph (1) of section 36C(a) of 7 such Code (as redesignated by paragraph (1)) 8 is amended by striking ‘‘this chapter’’ and in- 9 serting ‘‘this subtitle’’. 10 (D) Subparagraph (C) of section 129(a)(2) 11 of such Code is amended by striking ‘‘section 12 21(e)’’ and inserting ‘‘section 36C(e)’’. 13 (E) Paragraph (2) of section 129(b) of 14 such Code is amended by striking ‘‘section 15 21(d)(2)’’ and inserting ‘‘section 36C(d)(2)’’. 16 (F) Paragraph (1) of section 129(e) of 17 such Code is amended by striking ‘‘section 18 21(b)(2)’’ and inserting ‘‘section 36C(b)(2)’’. 19 (G) Subsection (e) of section 213 of such 20 Code is amended by striking ‘‘section 21’’ and 21 inserting ‘‘section 36C’’. 22 (H) Subparagraph (H) of section 23 6213(g)(2) of such Code is amended by striking 24 ‘‘section 21’’ and inserting ‘‘section 36C’’. 25 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 5 •S 137 IS (I) Subparagraph (L) of section 1 6213(g)(2) of such Code is amended by striking 2 ‘‘section 21, 24, or 32’’ and inserting ‘‘section 3 24, 32, or 36C’’. 4 (J) Paragraph (2) of section 1324(b) of 5 title 31, United States Code, is amended by in- 6 serting ‘‘36C,’’ after ‘‘36B,’’. 7 (K) The table of sections for subpart C of 8 part IV of subchapter A of chapter 1 of the In- 9 ternal Revenue Code of 1986 is amended by in- 10 serting after the item relating to section 36B 11 the following: 12 ‘‘Sec. 36C. Expenses for household and dependent care services necessary for gainful employment.’’. (L) The table of sections for subpart A of 13 such part IV is amended by striking the item 14 relating to section 21. 15 (e) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to taxable years beginning after 17 December 31, 2018. 18 SEC. 4. 3-YEAR CREDIT FOR INDIVIDUALS HOLDING CHILD 19 CARE-RELATED DEGREES WHO WORK IN LI- 20 CENSED CHILD CARE FACILITIES. 21 (a) IN GENERAL.—Subpart A of part IV of sub- 22 chapter A of chapter 1 of the Internal Revenue Code of 23 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 6 •S 137 IS 1986 is amended by inserting after section 25D the fol- 1 lowing new section: 2 ‘‘SEC. 25E. RIGHT START CHILD CARE AND EDUCATION 3 CREDIT. 4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in- 5 dividual who is an eligible child care provider for the tax- 6 able year, there shall be allowed as a credit against the 7 tax imposed by this chapter for the taxable year the 8 amount of $2,000. 9 ‘‘(b) 3-YEAR CREDIT.— 10 ‘‘(1) IN GENERAL.—The credit allowable by 11 subsection (a) for any taxable year to an individual 12 shall be allowed for such year only if the individual 13 elects the application of this section for such year. 14 ‘‘(2) ELECTION.—An election to have this sec- 15 tion apply may not be made by an individual for any 16 taxable year if such an election by such individual is 17 in effect for any 3 prior taxable years. 18 ‘‘(c) ELIGIBLE CHILD CARE PROVIDER.—For pur- 19 poses of this section— 20 ‘‘(1) IN GENERAL.—The term ‘eligible child 21 care provider’ means, for any taxable year, any indi- 22 vidual if— 23 ‘‘(A) as of the close of such taxable year, 24 such individual holds a bachelor’s degree in 25 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 7 •S 137 IS early childhood education, child care, or a re- 1 lated degree and such degree was awarded by 2 an eligible educational institution (as defined in 3 section 25A(f)(2)), and 4 ‘‘(B) during such taxable year, such indi- 5 vidual performs at least 1,200 hours of child 6 care services at a facility if— 7 ‘‘(i) the principal use of the facility is 8 to provide child care services, 9 ‘‘(ii) no more than 25 percent of the 10 children receiving child care services at the 11 facility are children (as defined in section 12 152(f)) of the individual or such individ- 13 ual’s spouse, and 14 ‘‘(iii) the facility meets the require- 15 ments of all applicable laws and regula- 16 tions of the State or local government in 17 which it is located, including the licensing 18 of the facility as a child care facility. 19 Subparagraph (B)(i) shall not apply to a facil- 20 ity which is the principal residence (within the 21 meaning of section 121) of the operator of the 22 facility. 23 VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS 8 •S 137 IS ‘‘(2) CHILD CARE SERVICES.—The term ‘child 1 care services’ means child care and early childhood 2 education.’’. 3 (b) CLERICAL AMENDMENT.—The table of sections 4 for subpart A of part IV of subchapter A of chapter 1 5 of the Internal Revenue Code of 1986 is amended by in- 6 serting after the item relating to section 25D the following 7 new item: 8 ‘‘Sec. 25E. Right Start Child Care and Education Credit.’’. (c) EFFECTIVE DATE.—The amendments made by 9 this section shall apply to taxable years beginning after 10 December 31, 2018. 11 SEC. 5. INCREASE IN EXCLUSION FOR EMPLOYER-PRO- 12 VIDED DEPENDENT CARE ASSISTANCE. 13 (a) IN GENERAL.—Subparagraph (A) of section 14 129(a)(2) of the Internal Revenue Code of 1986 is amend- 15 ed by striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$7,500 16 ($3,750’’. 17 (b) EFFECTIVE DATE.—The amendment made by 18 this section shall apply to taxable years beginning after 19 December 31, 2018. 20 Æ VerDate Sep 11 2014 04:21 Jan 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\S137.IS S137 kjohnson on DSK79L0C42 with BILLS