This bill expands tax credits and deductions related to child care and dependent care to make these services more affordable and accessible. It increases the employer-provided child care credit from 25 percent to 50 percent of qualified expenses and raises the maximum credit amount from $150,000 to $500,000, with even higher percentages and caps for small businesses. The bill also raises the income exclusion limit for dependent care assistance programs from $5,000 to $7,500 for individual filers. Additionally, it creates a new refundable tax credit for household and dependent care expenses, allowing individuals to receive up to 50 percent of eligible expenses (reduced based on income level) with a maximum of $5,000 to $8,000 per year depending on the number of dependents. These changes take effect for amounts paid or incurred after the bill is enacted and replace the existing dependent care credit with a more generous version, primarily benefiting working families and employers who offer child care support.
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