Increase in employer-provided child care credit amount

(a) In general Section 45F(a)(1) of the Internal Revenue Code of 1986 is amended by striking 25 percent and inserting the applicable percentage. (b) Applicable percentage Section 45F(a) of such Code, as amended by subsection (a), is amended— (1) 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, (2) by striking For purposes and inserting the following: (1) Credit allowed For purposes, and (3) by adding at the end the following new paragraph: (2) Applicable percentage (A) In general For 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 an eligible area, 60 percent. (B) Eligible small business 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. (C) Eligible area (i) In general For purposes of subparagraph (A), the term eligible area means— (I) a census tract described in section 45D(e), or (II) a rural county. (ii) Rural county (I) In general For purposes of this subparagraph, the term rural county means a county in which greater than 50 percent of the population of such county resides in census blocks that are designated as rural blocks (as determined by the Bureau of the Census according to the most recent decennial census). (II) Designation where no county For purposes of subclause (I), a rule similar to the rule of section 143(k)(2)(D) shall apply.. (c) Dollar limitation Section 45F(b) of such Code is amended to read as follows: (b) Dollar limitation (1) Aggregate limitation The credit allowable under subsection (a) for any taxable year shall not exceed $1,200,000. (2) Limitation with respect to qualified child care expenditures 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.. (d) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.