# Child and Dependent Care Tax Credit Enhancement Act of 2024

This bill makes it easier and more valuable for working parents to get tax credits when they pay for childcare or care for other dependents. Right now, the tax credit helps offset some of what families spend on daycare, after-school programs, or care for elderly parents, but the bill significantly expands this benefit.

The main changes are pretty straightforward. First, the bill increases how much childcare spending qualifies for the credit. Currently, you can claim a credit on up to $3,000 in expenses for one child or $6,000 for two or more dependents. The bill raises these limits to $8,000 and $16,000 respectively, meaning families can get tax credits on much more of what they actually spend on care. Second, the bill makes the credit more generous for middle-income families. It starts at 50 percent of your expenses (meaning if you spend $1,000, you get a $500 credit) and only reduces gradually as your income goes up. Families earning over $400,000 would see the credit phase down more significantly. This is a big deal because currently the credit shrinks much faster for higher earners.

The most important change is that the bill makes this credit "refundable" for families who live in the United States for more than half the year. This means if the credit is larger than the taxes you owe, you'll actually get the extra money back as a refund instead of just reducing what you owe. For lower-income working families who might not owe much in taxes anyway, this could mean getting real cash back to help pay for childcare. Finally, the bill includes automatic adjustments for inflation starting in 2025, so the dollar amounts will grow over time to keep pace with rising childcare costs.

Child and Dependent Care Tax Credit Enhancement Act of 2024

Davis, Danny K.

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.