S5254-118

2. Increase in employer-provided child care credit amount Section 45F(a)(1) of the Internal Revenue Code of 1986 is amended by striking 25 percent and inserting the applicable percentage. Section 45F(a) of such Code, as amended by subsection (a), is amended— by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and by moving the margins of such subparagraphs 2 ems to the right, by striking For purposes and inserting the following: For purposes by adding at the end the following new paragraph: For purposes of paragraph (1)(A), the applicable percentage is— except as otherwise provided in this paragraph, 40 percent, in the case of any qualified child care expenditures of an eligible small business, 50 percent, and in the case of any qualified child care expenditures paid or incurred in connection with a qualified child care facility located in a eligible census tract, 60 percent. For purposes of subparagraph (A), the term eligible small business means, with respect to any taxable year, any taxpayer if the annual average number of employees employed by such person during either of the 2 preceding taxable years was 500 or fewer. For purposes of the preceding sentence, a preceding taxable year may be taken into account only if the taxpayer was in existence throughout the year. For purposes of subparagraph (A), the term eligible census tract means any population census tract which— is described in section 45D(e), or is not an urban area. For purposes of this subparagraph, the term urban area means a census tract (as defined by the Bureau of the Census) which, according to the most recent decennial census, has been designated as an urban area by the Secretary of Commerce. Section 45F(b) of such Code is amended to read as follows: The credit allowable under subsection (a) for any taxable year shall not exceed $1,200,000. The aggregate amount of qualified child care expenditures which may be taken into account under this section for any taxable year shall not exceed $2,000,000. The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (1)Credit allowedFor purposes, and (2)Applicable percentage(A)In generalFor purposes of paragraph (1)(A), the applicable percentage is—(i)except as otherwise provided in this paragraph, 40 percent,(ii)in the case of any qualified child care expenditures of an eligible small business, 50 percent, and(iii)in the case of any qualified child care expenditures paid or incurred in connection with a qualified child care facility located in a eligible census tract, 60 percent.(B)Eligible small businessFor purposes of subparagraph (A), the term eligible small business means, with respect to any taxable year, any taxpayer if the annual average number of employees employed by such person during either of the 2 preceding taxable years was 500 or fewer. For purposes of the preceding sentence, a preceding taxable year may be taken into account only if the taxpayer was in existence throughout the year.(C)Eligible census tract(i)In generalFor purposes of subparagraph (A), the term eligible census tract means any population census tract which—(I)is described in section 45D(e), or(II)is not an urban area.(ii)Urban areaFor purposes of this subparagraph, the term urban area means a census tract (as defined by the Bureau of the Census) which, according to the most recent decennial census, has been designated as an urban area by the Secretary of Commerce.. (b)Dollar limitation(1)Aggregate limitationThe credit allowable under subsection (a) for any taxable year shall not exceed $1,200,000. (2)Limitation with respect to qualified child care expendituresThe aggregate amount of qualified child care expenditures which may be taken into account under this section for any taxable year shall not exceed $2,000,000..