A bill to amend the Internal Revenue Code of 1986 to enhance the Child and Dependent Care Tax Credit and make the credit fully refundable for certain taxpayers.

Child and Dependent Care Tax Credit Enhancement Act of 2024

This bill modifies the tax credit for employment-related expenses incurred for the care of a taxpayer's dependent to (1) increase to $400,000, the adjusted gross income threshold level above which the credit is incrementally reduced; (2) increase the dollar limits on the allowable amount of the credit; (3) specify rules for married couples filing separate returns; (4) allow an inflation adjustment to the adjusted gross income threshold and the maximum credit amounts, beginning after 2024; and (5) make the credit refundable for taxpayers who have a principal residence for more than half of the taxable year.

Bill 118 s 3657, also known as the Child and Dependent Care Tax Credit Enhancement Act, aims to make changes to the Internal Revenue Code of 1986 in order to improve the Child and Dependent Care Tax Credit. The bill specifically focuses on making the credit fully refundable for certain taxpayers.

Currently, the Child and Dependent Care Tax Credit allows taxpayers to claim a credit for a portion of the expenses incurred for the care of a qualifying child or dependent while the taxpayer is working or looking for work. However, the credit is not fully refundable, meaning that taxpayers may not receive the full benefit of the credit if they do not owe enough in taxes.

Under this bill, the Child and Dependent Care Tax Credit would become fully refundable for certain taxpayers, ensuring that they receive the full amount of the credit regardless of their tax liability. This change would provide additional financial support to families who rely on child care services in order to work or seek employment. Overall, the Child and Dependent Care Tax Credit Enhancement Act seeks to make the tax code more equitable for families who require child care services, by ensuring that all eligible taxpayers receive the full benefit of the credit.