[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2879 Introduced in Senate (IS)]

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114th CONGRESS
  2d Session
                                S. 2879

   To amend the Internal Revenue Code of 1986 to provide further tax 
               incentives for dependent care assistance.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 28, 2016

Ms. Ayotte (for herself and Mrs. Capito) 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 provide further tax 
               incentives for dependent care assistance.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

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, \1/2\ 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) a 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.
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