Section 1 Short title
This Act may be cited as the “Right Start Child Care and Education Act of 2024”.
Right Start Child Care and Education Act of 2024
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.
Sec. 2 Increase in employer-provided child care credit
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 “50 percent”.
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”.
Increase in maximum credit— Subsection (b) of section 45F of the Internal Revenue Code of 1986 is amended by striking “$150,000” and inserting “$500,000”.
Special rule for small businesses— Section 45F(e) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(4) Small businesses
“(A) In general—In the case of a taxpayer described in subparagraph (B)—
“(i) subsection (a)(1) shall be applied by substituting “60 percent” for “50 percent”, and
“(ii) subsection (b) shall be applied by substituting “$600,000” for “$500,000”.
“(B) Taxpayer described—A taxpayer described in this subparagraph is a taxpayer that meets the gross receipts test of section 448(c), determined—
“(i) by substituting “5-taxable-year” for “3-taxable-year” in paragraph (1) thereof, and
“(ii) by substituting “5-year” for “3-year” each place such term appears in paragraph (3)(A) thereof.”
Treatment of jointly owned or operated childcare facility— Section 45F(c)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
“(C) Jointly owned or operated childcare facility—For purposes of subparagraph (A)(i)(I), a facility shall not fail to be treated as a qualified childcare facility of the taxpayer merely because such facility is jointly owned or operated by the taxpayer and other persons.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
Sec. 3 3-year credit for individuals holding child care-related degrees who work in licensed child care facilities
In general— Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:
“36C. Right start child care and education credit
“(a) In general—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—
“(1) $4,000, in the case of an eligible child care provider with a degree described in subsection (c)(1)(A)(i), and
“(2) $2,500, in any other case.
“(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—
“(i) a bachelor’s degree, or
“(ii) an associate's degree,
“(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.
“(2) Child care services—The term child care services means child care and early childhood education.”
Conforming amendments—
Section 6211(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting “, 36C” after “36B”.
Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting “, 36C” after “36B”.
Clerical amendment— 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 new item:
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
Sec. 4 Increase in exclusion for employer-provided dependent care assistance
In general— Section 129(a)(2)(A) of the Internal Revenue Code of 1986 is amended by striking “$5,000 ($2,500” and inserting “the applicable limitation amount (half such amount”.
Conforming amendment— Section 129(a)(2) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D) and by inserting after subparagraph (C) the following new subparagraph:
“(D) Applicable limitation amount—For purposes of this paragraph, the term applicable limitation amount means the amount that is the sum of—
“(i) $10,000, and
“(ii) $2,000 for each individual described in subparagraph (A) or (B) of section 21(b)(1) with respect to the taxpayer.”
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2024.