H.R. 5886 (112th): Middle Class Dependent Care Fairness Act of 2012

HR 5886 IH

To amend the Internal Revenue Code of 1986 to improve the dependent care credit by repealing the phasedown of the credit percentage and making permanent the increased dollar limitations.

June 1, 2012

Mr. ISRAEL (for himself and Mr. RYAN of Ohio) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to improve the dependent care credit by repealing the phasedown of the credit percentage and making permanent the increased dollar limitations.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

(a) Short Title- This Act may be cited as the ‘Middle Class Dependent Care Fairness Act of 2012’.

(b) Findings- Congress finds the following:

(1) During the past few decades we have seen a greater need for childcare which means a greater cost for middle-class families. These child care costs can be a major burden for modern families.

(2) In 2011, 44 percent of all American families included children under the age of 18. Fifty-eight and one-half percent of married couples with children both worked in 2011. The labor force participation rate of mothers with children under the age of 6 was 63.9 percent in 2011 compared with 39 percent in 1975.

(3) Nationwide, on any given day, 4.6 million children under the age of 5 are in child care outside the home.

(4) On average, families with children under the age of 5 spent $171 a week on child care in 2010. That’s $8,892 a year.

SEC. 2. DEPENDENT CARE CREDIT IMPROVEMENTS.

(a) Repeal of Phasedown of Credit Percentage- Subsection (a) of section 21 of the Internal Revenue Code of 1986 is amended to read as follows:

‘(a) Allowance of Credit- In the case of an individual for which there are 1 or more qualifying individuals (as defined in subsection (b)(1)) with respect to such individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 35 percent of the employment-related expenses (as defined in subsection (b)(2)) paid by such individual during the taxable year.’.

(b) Increased Dollar Limitations Made Permanent- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to the amendments made by section 204 of such Act.

(c) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

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