S.Amdt. 2782

SA 2782. Ms. SMITH (for herself and Mrs. Shaheen) submitted an
amendment intended to be proposed to amendment SA 2360 proposed by Mr.
Thune (for Mr. Graham) to the bill H.R. 1, to provide for
reconciliation pursuant to title II of H. Con. Res. 14; which was
ordered to lie on the table; as follows:

Strike section 70405 and insert the following:

SEC. 70405. ENHANCEMENT OF CHILD AND DEPENDENT CARE TAX
CREDIT.

(a) In General.--Paragraph (2) of section 21(a) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1), the term
`applicable percentage' means 50 percent reduced (but not
below the phaseout percentage) by 1 percentage point for each
$2,000 (or fraction thereof) by which the taxpayer's adjusted
gross income for the taxable year exceeds $125,000.
``(B) Phaseout percentage.--For purposes of subparagraph
(A), the term `phaseout percentage' means 20 percent reduced
(but not below zero) by 1 percentage point for each $2,000
(or fraction thereof) by which the taxpayer's adjusted gross
income for the taxable year exceeds $400,000.''.
(b) Increase in Dollar Limit on Amount Creditable.--
Subsection (c) of section 21 of the Internal Revenue Code of
1986 is amended--
(1) in paragraph (1), by striking ``$3,000'' and inserting
``$8,000'', and
(2) in paragraph (2), by striking ``$6,000'' and inserting
``$16,000''.
(c) Special Rule for Married Couples Filing Separate
Returns.--Paragraph (2) of section 21(e) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(2) Married couples filing separate returns.--
``(A) In general.--In the case of married individuals who
do not file a joint return for the taxable year--
``(i) the applicable percentage under subsection (a)(2) and
the number of qualifying individuals and aggregate amount
excludable under section 129 for purposes of subsection (c)
shall be determined with respect to each such individual as
if the individual had filed a joint return with the
individual's spouse, and
``(ii) the aggregate amount of the credits allowed under
this section for such taxable year with respect to both
spouses shall not exceed the amount which would have been
allowed under this section if the individuals had filed a
joint return.
``(B) Regulations.--The Secretary shall prescribe such
regulations or other guidance as is necessary to carry out
the purposes of this subsection.''.
(d) Adjustment for Inflation.--Section 21 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(i) Inflation Adjustment.--
``(1) In general.--In the case of a calendar year beginning
after 2025, the $125,000 amount in paragraph (2) of
subsection (a) and the dollar amounts in subsection (c) shall
each 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 dollar amount, after being
increased under paragraph (1), is not a multiple of $100,
such dollar amount shall be rounded to the next lowest
multiple of $100.''.
(e) Credit Made Refundable.--Section 21(g) of the Internal
Revenue Code of 1986 is amended to read as follows:

[[Page S4125]]

``(g) Credit Made Refundable for Certain Individuals.--If
the taxpayer (in the case of a joint return, either spouse)
has a principal place of abode in the United States
(determined as provided in section 32) for more than one-half
of the taxable year, the credit allowed under subsection (a)
shall be treated as a credit allowed under subpart C (and not
allowed under this subpart).''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2025.
At the appropriate place, insert the following:

SEC. __. ESTABLISHMENT OF 39.6 PERCENT INDIVIDUAL INCOME TAX
RATE BRACKET.

(a) In General.--Section 1(j)(2) is amended by
redesignating subparagraph (F) as subparagraph (G) and by
inserting after subparagraph (E) the following new
subparagraph:
``(F) 39.6 percent rate bracket.--Notwithstanding
subparagraphs (A) through (E), in prescribing the tables
under this subsection for purposes of paragraph (3)(B)--
``(i) the excess of taxable income over $2,500,000, if any,
shall be taxed at a rate of 39.6 percent, and
``(ii) paragraph (3)(B)(i) shall be applied with respect to
such $2,500,000 amount by substituting `2024' for `2017'.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2025.
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