21st Century Child Care Investment Act
This bill amends the Internal Revenue Code to allow a tax credit for employment-related expenses for services provided by a high quality child care center.
The credit applies to taxpayers with adjusted gross incomes below specified levels and is limited to: (1) $14,000 for each qualifying child who is under the age of three by the end of the year; and (2) $5,000 for each qualifying child who has attained the age of three by the end of the year, with adjustments for inflation after 2017. A "qualifying child" is a dependent who is under the age of five.
The care must be provided by a facility that: (1) receives a fee, payment, or grant for providing care for children (other than just children who reside at the facility and regardless of whether such facility is operated for profit); and (2) meets state licensing requirements.
For taxable years beginning more than five years after enactment of this bill, the facility must also: (1) meet high quality rating requirements under the quality rating and improvement system of the state in which the care is provided, and (2) be certified by the Department of Health and Human Services.
A portion of the high quality child care tax credit is refundable, depending on the adjusted gross income of the taxpayer. The Department of the Treasury must establish a program to, at the election of the taxpayer, make monthly advance payments of the credit directly to a high quality child care center.
The bill also makes a portion of the dependent care tax credit refundable.
[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5828 Introduced in House (IH)]
<DOC>
114th CONGRESS
2d Session
H. R. 5828
To amend the Internal Revenue Code of 1986 to provide a high quality
child care tax credit, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 14, 2016
Ms. Clark of Massachusetts (for herself, Ms. Linda T. Sanchez of
California, Ms. Norton, and Mr. Honda) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a high quality
child care tax credit, and for other purposes.
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 ``21st Century Child Care Investment
Act''.
SEC. 2. HIGH QUALITY CHILD CARE TAX CREDIT.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting before
section 26 the following new section:
``SEC. 25E. HIGH QUALITY CHILD CARE CREDIT.
``(a) In General.--In the case of an individual who elects the
application of this section for the taxable year, there shall be
allowed as a credit against the tax imposed by this chapter an amount
equal to the applicable amount of high quality child care expenses paid
by such individual during the taxable year with respect to a qualifying
child.
``(b) Limitation.--
``(1) In general.--The amount of the high quality child
care expenses which may be taken into account under subsection
(a) with respect to each qualifying child of the taxpayer shall
not exceed--
``(A) $14,000 for each qualifying child who has not
attained the age of 3 by the end of the taxable year,
and
``(B) $5,000 for each qualifying child who has
attained the age of 3 by the end of the taxable year.
``(2) Adjusted gross income limitation.--The dollar
limitation under paragraph (1)--
``(A) shall be zero under subparagraph (A) thereof
in the case of a taxpayer whose adjusted gross income
for the taxable year exceeds an amount equal to 400
percent of the poverty line, and
``(B) shall be zero under subparagraph (B) thereof
in the case of a taxpayer whose adjusted gross income
for the taxable year exceeds an amount equal to 200
percent of the poverty line.
``(c) Portion of Credit Refundable.--
``(1) In general.--The aggregate credits allowed to a
taxpayer under subpart C shall be increased by the difference
of--
``(A) the credit which would be allowed under this
section without regard to this subsection and the
limitation under section 26(a), over
``(B) the taxpayer's applicable family
contribution.
The amount of the credit allowed under this subsection shall
not be treated as a credit allowed under this subpart and shall
reduce the amount of credit otherwise allowable under
subsection (a) without regard to section 26(a).
``(2) Applicable family contribution.--For purposes of this
subsection--
``(A) In general.--The taxpayer's applicable family
contribution for a taxable year shall be the sum of the
amounts determined under subparagraph (B) with respect
to each qualifying child of the taxpayer for which high
quality child care expenses are taken into account
under this section for the taxable year.
``(B) Amounts determined.--The amount with respect
to a qualifying child under this subparagraph shall be
determined as follows:
``(i) In the case of a qualifying child who
has not attained age 3:
``If the taxpayer's adjusted
gross income for the
taxable year is the following Multiply such adjusted
percentage of the poverty line: gross income by:
Not more than 133 percent.................... 2 percent
More than 133 percent but not more than 150 6 percent
percent.
More than 150 percent but not more than 200 8 percent
percent.
More than 200 percent but not more than 250 10 percent
percent.
More than 250 percent........................ 12 percent.
``(ii) In the case of a qualifying child
who has attained age 3:
``If the taxpayer's adjusted
gross income for the
taxable year is the following Multiply such adjusted
percentage of the poverty line: gross income by:
Not more than 133 percent.................... 2 percent
More than 133 percent but not more than 150 6 percent
percent.
More than 150 percent but not more than 200 8 percent.
percent.
``(d) Definitions.--For purposes of this section--
``(1) Qualifying child.--The term `qualifying child' means
a dependent of the taxpayer (as defined in section 152(a)(1))
who has not attained age 5.
``(2) High quality child care expenses.--
``(A) In general.--The term `high quality child
care expenses' means employment-related expenses (as
defined in section 21(b)(2)(A)) for services provided
by a high quality child care center.
``(B) High quality child care center.--The term
`high quality child care center' means any facility,
including family child care homes, which--
``(i) receives a fee, payment, or grant for
providing care for qualified children (other
than just children who reside at the facility
and regardless of whether such facility is
operated for profit),
``(ii) meets the State licensing
requirements for providing care to qualified
children, and
``(iii) in the case of taxable years
beginning more than 5 years after the date of
the enactment of this section--
``(I) meets the high quality rating
requirements under the quality rating
and improvement system of the State
within which the care of the qualifying
child is provided, or
``(II) is certified by the
Secretary of Health and Human Services
under such standards as the Secretary
of Health and Human Services, in
consultation with the Secretary, shall
by regulation prescribe.
``(C) Quality rating and improvement system.--The
term `quality rating and improvement system' means a
system through which a State uses a set of
progressively higher program standards to evaluate the
quality of an early childhood program and to support
program improvement. Any such program shall include the
following:
``(i) Tiered Program Standards with
multiple rating categories that clearly and
meaningfully differentiate program quality
levels.
``(ii) Monitoring to evaluate program
quality based on the program standards
determined by the State.
``(iii) Support to help programs and the
child care workforce meet progressively higher
standards (including through training,
technical assistance, and financial support,
and facilitating participation in organizations
that foster professional development).
``(iv) Program quality ratings that are
publically available and a process for
validating the system.
``(D) High quality rating requirement.--
``(i) In general.--A facility shall be
treated as meeting the high quality rating
requirements of a State's quality rating and
improvement system if the facility is rated in
the top tier by a State with a 3-tier rating
system or in the top 2 tiers by a State with a
4- or 5-tier rating system. A facility shall
not be treated as meeting the requirements of
the preceding sentence unless the State's
rating system includes compensation standards
updated at least every 3 years under the study
required under clause (ii).
``(ii) Study on the cost of high quality
child care.--A State shall not be treated as
having a rating system for purposes of clause
(i) unless the State conducts a study on the
cost of high quality child care at least once
every 3 years to analyze costs associated with
delivering high quality child care including--
``(I) an assessment of the
compensation levels sufficient to
recruit and retain a qualified and
diverse child care workforce and allow
entry-level child care staff to
maintain a secure standard of living
and meet their families' essential
needs, and
``(II) information gathered through
a public hearing to solicit input from
relevant stakeholders including the
child care workforce.
``(3) Poverty line.--
``(A) In general.--The term `poverty line' has the
meaning given such term in section 673(2) of the
Community Services Block Grant Act (42 U.S.C. 9902(2)),
including any revision required by such section. The
poverty line determined with respect to taxpayer shall
be the poverty line for a family of the size involved.
``(B) Family size.--The family size involved with
respect to any taxpayer shall be equal to the number of
individuals for whom the taxpayer is allowed a
deduction under section 151 (relating to allowance of
deduction for personal exemptions) for the taxable
year.
``(e) Special Rules.--
``(1) Advance payment program.--
``(A) In general.--The Secretary of the Treasury,
in consultation with the Secretary of Health and Human
Services, shall establish a program--
``(i) to make advance determinations with
respect to the eligibility of individuals for
the credit allowed under this section, and
``(ii) to make monthly advance payments of
the credit allowed under this section, at the
election of the taxpayer, directly to a high
quality child care center providing care for a
qualifying child of the taxpayer.
``(B) Reconciliation of credit and advance
payment.--
``(i) In general.--The amount of the credit
allowed under this section for any taxable year
shall be reduced (but not below zero) by the
amount of any advance payment of such credit
under subparagraph (A).
``(ii) Excess advance payments.--If the
advance payments to a taxpayer under
subparagraph (A) for a taxable year exceed the
credit allowed by this section (determined
without regard to subparagraph (A)), the tax
imposed by this chapter for the taxable year
shall be increased by the amount of such
excess.
``(iii) Limitation on increase.--
``(I) In general.--In the case of a
taxpayer whose tax is increased
(determined without regard to this
clause) for the taxable year under
clause (ii) with respect to a qualified
child, such increase shall not exceed
the applicable dollar amount determined
in accordance with the table under
subclause (I) in the case of any
portion of the credit determined with
respect to a qualifying child who has
not attained the age of 3 by the end of
the taxable year, and in accordance
with the table under subclause (II) in
the case of any portion of the credit
determined with respect to a qualifying
child who has attained the age of 3 by
the end of the taxable year.
``(II) Under age 3.--The table
under this subclause is as follows:
``If the adjusted gross income
(expressed as a percent The applicable dollar
of poverty line) is: amount is:
Less than 400 percent.............................. $600
At least 400 percent but less than 500 percent..... $1,500
At least 500 percent but less than 600 percent..... $2,500.
``(III) Age 3 and 4.--The table
under this subclause is as follows:
``If the adjusted gross income
(expressed as a percent The applicable dollar
of poverty line) is: amount is:
Less than 200 percent.............................. $600
At least 200 percent but less than 300 percent..... $1,500
At least 300 percent but less than 400 percent..... $2,500.
``(C) Inflation adjustment.--
``(i) In general.--In the case of any
taxable year beginning after 2017, the dollar
amounts in subsection (b)(1) 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.
``(ii) Rounding.--If the dollar amount in
subsection (b)(1), after being increased under
clause (i), is not a multiple of $100, such
amount shall be rounded to the next lowest
multiple of $100.
``(2) Information requirements.--Each high quality child
care center which receives payments from the Secretary under
paragraph (1) shall for each calendar year provide the
following information to the Secretary and to the taxpayer with
respect to the child for which such payments were made:
``(A) The total cost of care for such child for
such year (determined without regard to the credit
under this section).
``(B) The aggregate amount of any advance payment
of such credit made with respect to such child.
``(C) The name, address, age, and TIN of the
taxpayer and the child.
``(D) Any information provided to such person
necessary to determine eligibility for, and the amount
of, such credit.
``(3) Coordination with other dependent care provisions.--
``(A) Dependent care credit.--No credit shall be
allowed under section 21 for any taxable year for which
the taxpayer elects the application of this section.
``(B) Dependent care programs.--The amount taken
into account under subsection (a) with respect to a
qualifying child shall be reduced by the aggregate
amount excludable from gross income under section 129
for the taxable year with respect to such child.
``(4) Rules relating to marriage and payments to related
individuals.--Rules similar to the rules of paragraphs (2),
(3), (4), and (6) of section 21(e) shall apply for purposes of
this section.''.
(b) Conforming Amendment.--Section 1324(b)(2) of title 31, United
States Code, is amended by inserting ``25E,'' after ``25A,''.
(c) Clerical Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting before the item relating to section 26 the following new
item:
``Sec. 25E. High quality child care credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
SEC. 3. PORTION OF DEPENDENT CARE CREDIT MADE REFUNDABLE.
(a) In General.--Section 21 of the Internal Revenue Code of 1986 is
amended by redesignating subsection (f) as subsection (g) and by
inserting after subsection (e) the following new subsection:
``(f) Portion of Credit Refundable.--The aggregate credits allowed
to a taxpayer under subpart C shall be increased by the lesser of--
``(1) the credit which would be allowed under this section
without regard to this subsection and the limitation under
section 26(a), or
``(2)(A) in the case of a taxpayer with 1 qualifying child,
$1,050, or
``(B) in the case of a taxpayer with more than 1 qualifying
child, $2,100.
The amount of the credit allowed under this subsection shall
not be treated as a credit allowed under this subpart and shall
reduce the amount of credit otherwise allowable under
subsection (a) without regard to section 26(a).''.
(b) Clerical Amendment.--Section 1324(b)(2) of title 31, United
States Code, is amended by inserting ``24,'' before ``25A,''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2016.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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