Bill > HR2900

This bill, known as the PACE Act (Promoting Affordable Childcare for Everyone Act), introduces several significant changes to tax credits and deductions related to childcare expenses. First, it redesignates the existing Child and Dependent Care Tax Credit as section 36C of the Internal Revenue Code and makes it fully refundable, meaning that taxpayers can receive the credit even if they do not owe taxes. The bill increases the percentage of childcare expenses that can be claimed from 35% to 50%, with a minimum of 35%, and introduces an annual inflation adjustment for the credit amounts starting in 2026. Additionally, the bill increases the maximum amount that can be excluded from gross income for employer-provided dependent care assistance from $5,000 to $7,500, also with an annual inflation adjustment beginning in 2027. These changes aim to provide greater financial support to working parents by making childcare more affordable through enhanced tax benefits. All provisions of the bill are set to take effect for taxable years beginning after December 31, 2025, giving employers and taxpayers time to prepare for the new regulations.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/2900/all-info