S. 137 - Right Start Child Care and Education Act of 2019

116TH CONGRESS
1ST SESSION

S. 137

To amend the Internal Revenue Code of 1986 to increase
the credit for employers establishing workplace child care facilities,
to increase the child care credit to encourage greater
use of quality child care services, to provide incentives
for students to earn child care-related degrees and to work
in child care facilities, and to increase the exclusion
for employer-provided dependent care assistance.

IN THE SENATE OF THE UNITED STATES

JANUARY 16, 2019

Mrs. SHAHEEN (for herself, Mrs. GILLIBRAND, Ms. KLOBUCHAR,
and Mr. SCHATZ) introduced the following bill; which
was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to increase the credit for employers establishing workplace child care facilities, to increase the child care credit to encourage greater use of quality child care services, to provide incentives for students to earn child care-related degrees and to work in child care facilities, and to increase the exclusion for employer-provided dependent care assistance.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the "Right Start Child Care and Education Act of 2019".

SEC. 2. INCREASE IN EMPLOYER-PROVIDED CHILD CARE CREDIT.

(a) INCREASE IN CREDITABLE PERCENTAGE OF CHILD CARE EXPENDITURES. — Paragraph (1) of section 45F(a) of the Internal Revenue Code of 1986 is amended by striking "25 percent" and inserting "35 percent".

(b) INCREASE IN CREDITABLE PERCENTAGE OF RESOURCE AND REFERRAL EXPENDITURES. — Paragraph (2) of section 45F(a) of the Internal Revenue Code of 1986 is amended by striking "10 percent" and inserting "20 percent".

(c) INCREASE IN MAXIMUM CREDIT. — Subsection (b) of section 45F of the Internal Revenue Code of 1986 is amended by striking "$150,000" and inserting "$225,000".

(d) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2018.

SEC. 3. INCREASE IN DEPENDENT CARE CREDIT.

(a) INCREASE IN INCOMES ELIGIBLE FOR FULL CREDIT. — Paragraph (2) of section 21(a) of the Internal Revenue Code of 1986 is amended by striking "$15,000" and inserting "$30,000".

(b) INCREASE IN PERCENTAGE OF EXPENSES ALLOWABLE. — Paragraph (2) of section 21(a) of the Internal Revenue Code of 1986 is amended —

(1) by striking "35 percent" and inserting "50 percent", and

(2) by striking "20 percent" and inserting "35 percent".

(c) INCREASE IN DOLLAR LIMIT ON AMOUNT CREDITABLE. — Subsection (c) of section 21 of the Internal Revenue Code of 1986 is amended —

(1) by striking "$3,000" in paragraph (1) and inserting "$6,000", and

(2) by striking "$6,000" in paragraph (2) and inserting "$12,000".

(d) CREDIT TO BE REFUNDABLE. —

(1) IN GENERAL. — The Internal Revenue Code of 1986 is amended —

(A) by redesignating section 21 as section 36C, and

(B) by moving section 36C, as so redesignated, from subpart A of part IV of subchapter A of chapter 1 to the location immediately before section 37 in subpart C of part IV of subchapter A of chapter 1.

(2) TECHNICAL AMENDMENTS. —

(A) Paragraph (1) of section 23(f) of such Code is amended by striking "21(e)" and inserting "36C(e)".

(B) Paragraph (6) of section 35(g) of such Code is amended by striking "21(e)" and inserting "36C(e)".

(C) Paragraph (1) of section 36C(a) of such Code (as redesignated by paragraph (1)) is amended by striking "this chapter" and inserting "this subtitle".

(D) Subparagraph (C) of section 129(a)(2) of such Code is amended by striking "section 21(e)" and inserting "section 36C(e)".

(E) Paragraph (2) of section 129(b) of such Code is amended by striking "section 21(d)(2)" and inserting "section 36C(d)(2)".

(F) Paragraph (1) of section 129(e) of such Code is amended by striking "section 21(b)(2)" and inserting "section 36C(b)(2)".

(G) Subsection (e) of section 213 of such Code is amended by striking "section 21" and inserting "section 36C".

(H) Subparagraph (H) of section 6213(g)(2) of such Code is amended by striking "section 21" and inserting "section 36C".

(I) Subparagraph (L) of section 6213(g)(2) of such Code is amended by striking "section 21, 24, or 32" and inserting "section 24, 32, or 36C".

(J) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting "36C," after "36B,".

(K) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following:

"Sec. 36C. Expenses for household and dependent care services necessary for gainful employment.".

(L) The table of sections for subpart A of such part IV is amended by striking the item relating to section 21.

(e) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2018.

SEC. 4. 3-YEAR CREDIT FOR INDIVIDUALS HOLDING CHILD CARE-RELATED DEGREES WHO WORK IN LICENSED CHILD CARE FACILITIES.

(a) IN GENERAL. — Subpart A of part IV of sub-chapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section:

"SEC. 25E. RIGHT START CHILD CARE AND EDUCATION CREDIT.

"(a) ALLOWANCE OF CREDIT. — In the case of an individual who is an eligible child care provider for the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the amount of $2,000.

"(b) 3-YEAR CREDIT. —

"(1) IN GENERAL. — The credit allowable by subsection (a) for any taxable year to an individual shall be allowed for such year only if the individual elects the application of this section for such year.

"(2) ELECTION. — An election to have this section apply may not be made by an individual for any taxable year if such an election by such individual is in effect for any 3 prior taxable years.

"(c) ELIGIBLE CHILD CARE PROVIDER. — For purposes of this section —

"(1) IN GENERAL. — The term 'eligible child care provider' means, for any taxable year, any individual if —

"(A) as of the close of such taxable year, such individual holds a bachelor's degree in early childhood education, child care, or a related degree and such degree was awarded by an eligible educational institution (as defined in section 25A(f)(2)), and

"(B) during such taxable year, such individual performs at least 1,200 hours of child care services at a facility if —

"(i) the principal use of the facility is to provide child care services,

"(ii) no more than 25 percent of the children receiving child care services at the facility are children (as defined in section 152(f)) of the individual or such individual's spouse, and

"(iii) the facility meets the requirements of all applicable laws and regulations of the State or local government in which it is located, including the licensing of the facility as a child care facility.

Subparagraph (B)(i) shall not apply to a facility which is the principal residence (within the meaning of section 121) of the operator of the facility.

"(2) CHILD CARE SERVICES. — The term 'child care services' means child care and early childhood education.".

(b) CLERICAL AMENDMENT. — The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item:

"Sec. 25E. Right Start Child Care and Education Credit.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after December 31, 2018.

SEC. 5. INCREASE IN EXCLUSION FOR EMPLOYER-PROVIDED DEPENDENT CARE ASSISTANCE.

(a) IN GENERAL. — Subparagraph (A) of section 129(a)(2) of the Internal Revenue Code of 1986 is amended by striking "$5,000 ($2,500" and inserting "$7,500 ($3,750".

(b) EFFECTIVE DATE. — The amendment made by this section shall apply to taxable years beginning after December 31, 2018.