Bill > HR2994

This bill proposes significant enhancements to the Child and Dependent Care Tax Credit, which helps families offset the costs of childcare. The legislation would increase the maximum credit percentage from the current rate to 50%, with a gradual phaseout for taxpayers with higher incomes starting at $125,000 and fully phasing out at $400,000. The bill also substantially raises the dollar limits on creditable expenses, increasing the maximum from $3,000 to $8,000 for one qualifying individual and from $6,000 to $16,000 for two or more qualifying individuals. Additionally, the bill introduces an annual inflation adjustment to these amounts starting in 2026, ensuring the credit's value keeps pace with rising costs. For married couples filing separately, the bill establishes new rules to ensure fair credit allocation. Perhaps most significantly, the bill makes the credit partially refundable for certain individuals, meaning that taxpayers can receive the credit even if it exceeds their tax liability, which could provide more financial relief to lower-income families. These changes would apply to tax years beginning after December 31, 2024, offering immediate benefits to families struggling with childcare expenses.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/2994/all-info