S.Amdt. 2782

This amendment aims to change section 70405 and add a new section to the bill to modify tax laws.

Enhancement of Child and Dependent Care Tax Credit The amendment proposes the following changes to the child and dependent care tax credit:

• It updates the applicable percentage to 50 percent, which is reduced by 1 percentage point for every $2,000 the taxpayer's adjusted gross income exceeds $125,000.
• It sets a phaseout percentage at 20 percent, which is reduced by 1 percentage point for every $2,000 the adjusted gross income exceeds $400,000.
• It increases the dollar limits on the amount creditable from $3,000 to $8,000, and from $6,000 to $16,000.
• It creates a special rule for married couples filing separate returns to determine the applicable percentage and qualifying individuals as if they had filed a joint return.
• It adds an inflation adjustment for the $125,000 amount and the dollar amounts in subsection (c) for calendar years beginning after 2025.
• It makes the credit refundable for taxpayers who have a principal place of abode in the United States for more than half the taxable year.
• These changes would apply to taxable years beginning after December 31, 2025.

New Individual Income Tax Rate Bracket The amendment also aims to add a new tax bracket:

• It establishes a 39.6 percent rate bracket for taxable income that exceeds $2,500,000.
• This change would apply to taxable years beginning after December 31, 2025.