PACE Act

II 116TH CONGRESS 1ST SESSION S. 749 To amend the Internal Revenue Code of 1986 to increase and make fully refundable the Child and Dependent Care Tax Credit, to increase the maximum amount excludable from gross income for employer-provided dependent care assistance, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 12, 2019 Mr. KING (for himself, Mr. BURR, Ms. COLLINS, Ms. SINEMA, and Ms. ROSEN) 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 and make fully refundable the Child and Dependent Care Tax Credit, to increase the maximum amount excludable from gross income for employer-provided dependent care assistance, and for other purposes. 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 ‘‘Promoting Affordable 4 Childcare for Everyone Act’’ or the ‘‘PACE Act’’. 5 VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 749 IS SEC. 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE 1 TAX CREDIT. 2 (a) IN GENERAL.—The Internal Revenue Code of 3 1986 is amended— 4 (1) by redesignating section 21 as section 36C, 5 and 6 (2) by moving section 36C, as so redesignated, 7 from subpart A of part IV of subchapter A of chap- 8 ter 1 to the location immediately before section 37 9 in subpart C of part IV of subchapter A of chapter 10 1. 11 (b) TECHNICAL AMENDMENTS.— 12 (1) Paragraph (1) of section 23(f) of the Inter- 13 nal Revenue Code of 1986 is amended by striking 14 ‘‘21(e)’’ and inserting ‘‘36C(e)’’. 15 (2) Paragraph (6) of section 35(g) of such Code 16 is amended by striking ‘‘21(e)’’ and inserting 17 ‘‘36C(e)’’. 18 (3) Paragraph (1) of section 36C(a) of such 19 Code (as redesignated by subsection (a)) is amended 20 by striking ‘‘this chapter’’ and inserting ‘‘this sub- 21 title’’. 22 (4) Subparagraph (C) of section 129(a)(2) of 23 such Code is amended by striking ‘‘section 21(e)’’ 24 and inserting ‘‘section 36C(e)’’. 25 VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 749 IS (5) Paragraph (2) of section 129(b) of such 1 Code is amended by striking ‘‘section 21(d)(2)’’ and 2 inserting ‘‘section 36C(d)(2)’’. 3 (6) Paragraph (1) of section 129(e) of such 4 Code is amended by striking ‘‘section 21(b)(2)’’ and 5 inserting ‘‘section 36C(b)(2)’’. 6 (7) Subsection (e) of section 213 of such Code 7 is amended by striking ‘‘section 21’’ and inserting 8 ‘‘section 36C’’. 9 (8) Subparagraph (H) of section 6213(g)(2) of 10 such Code is amended by striking ‘‘section 21’’ and 11 inserting ‘‘section 36C’’. 12 (9) Subparagraph (L) of section 6213(g)(2) of 13 such Code is amended by striking ‘‘section 21, 24, 14 or 32,’’ and inserting ‘‘section 24, 32, or 36C,’’. 15 (10) Paragraph (2) of section 1324(b) of title 16 31, United States Code, is amended by inserting 17 ‘‘36C,’’ after ‘‘36B,’’. 18 (11) The table of sections for subpart C of part 19 IV of subchapter A of chapter 1 of the Internal Rev- 20 enue Code of 1986 is amended by inserting after the 21 item relating to section 36B the following: 22 ‘‘Sec. 36C. Expenses for household and dependent care services necessary for gainful employment.’’. VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 749 IS (12) The table of sections for subpart A of such 1 part IV is amended by striking the item relating to 2 section 21. 3 (c) EFFECTIVE DATE.—The amendments made by 4 this section shall apply to taxable years beginning after 5 December 31, 2019. 6 SEC. 3. ENHANCEMENT OF THE CHILD AND DEPENDENT 7 CARE TAX CREDIT. 8 (a) IN GENERAL.—Section 36C of the Internal Rev- 9 enue Code of 1986, as redesignated by section 2 of this 10 Act, is amended— 11 (1) in paragraph (2) of subsection (a), by strik- 12 ing ‘‘35 percent reduced (but not below 20 percent)’’ 13 and inserting ‘‘50 percent reduced (but not below 35 14 percent)’’, 15 (2) by redesignating subsection (f) as sub- 16 section (g), and 17 (3) by inserting after subsection (e) the fol- 18 lowing new subsection: 19 ‘‘(f) INFLATION ADJUSTMENT.— 20 ‘‘(1) IN GENERAL.—In the case of any taxable 21 year beginning after 2019, each of the dollar 22 amounts in subsections (a)(2) and (c) shall be in- 23 creased by an amount equal to— 24 ‘‘(A) such dollar amount, multiplied by 25 VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 749 IS ‘‘(B) the cost-of-living adjustment deter- 1 mined under section 1(f)(3) for the calendar 2 year in which the taxable year begins, deter- 3 mined by substituting ‘calendar year 2018’ for 4 ‘calendar year 2016’ in subparagraph (A)(ii) 5 thereof. 6 ‘‘(2) ROUNDING.—If any increase determined 7 under paragraph (1) is not a multiple of $50, such 8 increase shall be rounded to the nearest multiple of 9 $50.’’. 10 (b) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to taxable years beginning after 12 December 31, 2019. 13 SEC. 4. INCREASE IN EXCLUSION FOR EMPLOYER-PRO- 14 VIDED DEPENDENT CARE ASSISTANCE. 15 (a) IN GENERAL.—Subparagraph (A) of section 16 129(a)(2) of the Internal Revenue Code of 1986 (relating 17 to dependent care assistance programs) is amended by 18 striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$7,500 (half 19 such dollar amount’’. 20 (b) INFLATION ADJUSTMENT.—Paragraph (2) of sec- 21 tion 129(a) of such Code is amended by redesignating sub- 22 paragraph (C) as subparagraph (D) and by inserting after 23 subparagraph (B) the following new subparagraph: 24 VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 749 IS ‘‘(C) INFLATION ADJUSTMENT.—In the 1 case of any taxable year beginning in a calendar 2 year after 2020, the $7,500 amount in subpara- 3 graph (A) shall be increased by an amount 4 equal to— 5 ‘‘(i) such dollar amount, multiplied by 6 ‘‘(ii) the cost-of-living adjustment de- 7 termined under section 1(f)(3) for the cal- 8 endar year in which the taxable year be- 9 gins, determined by substituting ‘calendar 10 year 2019’ for ‘calendar year 2016’ in sub- 11 paragraph (A)(ii) thereof. 12 Any increase determined under the preceding 13 sentence shall be rounded to the nearest mul- 14 tiple of $100.’’. 15 (c) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to taxable years beginning after 17 December 31, 2019. 18 Æ VerDate Sep 11 2014 02:01 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S749.IS S749 pamtmann on DSKBFK8HB2PROD with BILLS