Enhancement of Child and Dependent Care Tax Credit

(a)

In general

Section 21(a)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

(2)

Applicable percentage

For purposes of paragraph (1), the term applicable percentage means 50 percent reduced (but not below 20 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $120,000.

(b)

Increase in dollar limit on amount creditable

Section 21(c) of such Code is amended— (1)in paragraph (1), by striking $3,000 and inserting $6,000, and (2)in paragraph (2), by striking $6,000 and inserting $12,000. (c)

Special rule for married couples filing separate returns

Section 21(e)(2) of such Code is amended to read as follows:

(2)

Married couples filing separate returns

(A)

In general

In the case of a married individual who files a separate return for a taxable year— (i)the limits under subsections (a) and (c) shall be applied to the individual and the individual’s spouse as if they had filed a joint return, and (ii)the aggregate amount of the credit allowed under this section for such taxable year to both spouses shall not exceed the amount that would have been allowed if the spouses had filed a joint return. (B)

Regulations

The Secretary shall prescribed such regulations or other guidance as is necessary to carry out the purposes of this subsection.

(d)

Adjustment for inflation

Section 21 of such Code is amended— (1)by redesignating subsection (f) as subsection (g), and (2)by inserting after subsection (e) the following new subsection:

(f)

Inflation adjustment

(1)

In general

In the case of a calendar year beginning after 2020, the $120,000 amount in paragraph (2) of subsection (a) and the dollar amounts in subsection (c) shall each 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 2019 for calendar year 2016 in subparagraph (A)(ii) thereof. (2)

Rounding

If any dollar amount, after being increased under paragraph (1), is not a multiple of $100, such dollar amount shall be rounded to the next lowest multiple of $100.

(e)

Credit To Be Refundable

(1)

In general

The Internal Revenue Code of 1986 is amended— (A)by redesignating section 21 as section 36C, and (B)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. (2)

Technical amendment

(A)Section 23(f)(1) of the Internal Revenue Code of 1986 is amended by striking 21(e) and inserting 36C(e). (B)Section 35(g)(6) of such Code is amended by striking 21(e) and inserting 36C(e). (C)Section 36C(a)(1) of such Code (as redesignated by paragraph (1)) is amended by striking this chapter and inserting this subtitle. (D)Section 129(a)(2)(C) of such Code is amended by striking section 21(e) and inserting section 36C(e). (E)Section 129(b)(2) of such Code is amended by striking section 21(d)(2) and inserting section 36C(d)(2). (F)Section 129(e)(1) of such Code is amended by striking section 21(b)(2) and inserting section 36C(b)(2). (G)Section 213(e) of such Code is amended by striking section 21 and inserting section 36C. (H)Section 6213(g)(2)(H) of such Code is amended by striking section 21 and inserting section 36C. (I)Section 6213(g)(2)(L) of such Code is amended by striking section 21, 24, or 32 and inserting section 24, 32, or 36C. (J)Section 1324(b)(2) of title 31, United States Code, is amended by inserting 36C, after 36B,. (K)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.

(L)The table of sections for subpart A of such part IV is amended by striking the item relating to section 21. (f)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2019.