Enhancement of the Child and Dependent Care Tax Credit

(a) In general Section 36C of the Internal Revenue Code of 1986, as redesignated by section 2 of this Act, is amended— (1) in paragraph (2) of subsection (a), by striking 35 percent reduced (but not below 20 percent) and inserting 50 percent reduced (but not below 35 percent); (2) by striking subsection (g) and redesignating subsection (f) as subsection (g); and (3) by inserting after subsection (e) the following new subsection: (f) Inflation adjustment (1) In general In the case of any taxable year beginning after 2025, each of the dollar amounts in subsections (a)(2) and (c) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. (2) Rounding If any increase determined under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.. (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.