Child Care Availability and Affordability Act

Increased Credit for Employers: The bill increases the qualified child care expenditure percentage from 25 percent to 50 percent and raises the maximum credit amount from $150,000 to $500,000 (Section 2(a) and 2(b)).

Benefits for Small Businesses: Small businesses receive an even higher credit, increasing the percentage to 60 percent and the maximum amount to $600,000 (Section 2(d)).

Flexibility for Jointly Owned Facilities: A facility will not lose its status as a qualified childcare facility just because it is jointly owned or operated by the taxpayer and others (Section 2(c)).

Higher Exclusions for Dependent Care: The amount excludable for dependent care assistance programs is increased (Section 3(a)).

New Refundable Credit for Individuals: A new credit for expenses related to household and dependent care services necessary for gainful employment is established (Section 4(a)).

Expanded Coverage for Dependents: The credit applies to dependents under age 13 or those who are physically or mentally incapable of self-care, as well as certain spouses (Section 4(b)(1)).

Income-Based Credit Reductions: For the new household and dependent care credit, the applicable percentage is reduced based on the taxpayer's adjusted gross income (Section 4(a)(2)).

Limits on Creditable Expenses: The amount of employment-related expenses that can be used for the credit is capped at $5,000 for one qualifying individual or $8,000 for two or more qualifying individuals (Section 4(c)).

Earned Income Restrictions: The credit is subject to an earned income limitation, which limits the amount based on the individual's or spouse's earnings (Section 4(d)(1)).

Stringent Documentation Requirements: To receive the credit, taxpayers must include the name, address, and taxpayer identification number of the service provider on their return (Section 4(e)(9)).