119 HR 2900 IH: Promoting Affordable Childcare for Everyone Act U.S. House of Representatives 2025-04-10 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I119th CONGRESS1st SessionH. R. 2900IN THE HOUSE OF REPRESENTATIVESApril 10, 2025Ms. Tenney (for herself and Mr. Schneider) introduced the following bill; which was referred to the Committee on Ways and MeansA BILLTo 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.
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 inserting 36C, after 32,.(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 part IV of subchapter A of chapter 1 of such Code 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, 2025.
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 (2) 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 striking subsection (g) and 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 2025, 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 2024 for calendar year 2016 in subparagraph (A)(ii) 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, 2025.
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 striking subparagraph (D) and inserting the following new subparagraph:(D)
Inflation adjustment
In the case of any taxable year beginning in a calendar year after 2026, 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 2025 for calendar year 2016 in subparagraph (A)(ii) 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, 2025.