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People & committees
Rep. Gottheimer, Josh [D-NJ-5] · D–NJ
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
No related bills are listed in this snapshot. This does not establish whether the proposal has appeared in earlier Congresses.
Source last updated: May 5, 2025. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-02-06 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The proposed LITTLE Act of 2025 would create a tax credit for qualifying childcare providers’ startup costs, capped at $10,000 per taxpayer across all years. It would also replace the existing household and dependent care credit with a credit covering 35%–50% of eligible expenses that enable a person to work, subject to income, expense and eligibility rules. That credit would cover care for qualifying children under 13 and certain dependents or spouses unable to care for themselves. The bill describes the replacement credit as refundable.
This Act may be cited as the Lowering Infant and Toddler Tuition for Learning and Education Act of 2025 or the LITTLE Act of 2025.
The aggregate amount of credits determined under subsection (a) for any taxpayer in all taxable years may not exceed $10,000.
an amount equal to 30 percent of the qualified childcare startup expenses of the taxpayer for the taxable year.
3. Household and dependent care credit increased and made refundable
the term applicable percentage means 50 percent reduced (but not below 35 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000.
The term qualifying individual means— (A) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13, (B) a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)) who is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year, or (C) the spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year.
but only if such expenses are incurred to enable the taxpayer to be gainfully employed
Subpart A of part IV of subchapter A of chapter 1 of such Code is amended by repealing section 21
Section 2 would give qualifying childcare providers a tax credit equal to 30% of eligible startup expenses. A provider would have to comply with applicable state or local childcare requirements and serve at least two children for a significant portion of the tax year.
In the case of a qualified taxpayer, there shall be allowed as a credit against the tax imposed by this subtitle an amount equal to 30 percent of the qualified childcare startup expenses of the taxpayer for the taxable year.
a taxpayer that— (1) provides childcare services in compliance with any applicable State or local requirements for such services, and (2) provided such services to 2 or more children for a significant portion of the taxable year.
Eligible startup expenses would have to meet the existing tax code’s definition of a startup expenditure, relate to establishing and operating a childcare service, and be paid or incurred within the two-year period ending with the tax year. Total startup credits could not exceed $10,000 per taxpayer across all tax years.
a start-up expenditure (as defined in section 195(c)(1)) paid or incurred during the 2-year period ending on the last day of such taxable year to establish and operate a childcare service.
The aggregate amount of credits determined under subsection (a) for any taxpayer in all taxable years may not exceed $10,000.
An expense could not receive the startup credit if another provision of the same tax-code chapter allowed a deduction or credit for it. The startup credit would be included in the general business credit.
No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
Section 38(b) is amended by striking plus at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting , plus, and by adding at the end the following new paragraph: (42) the childcare provider startup credit determined under section 45BB(a).
The startup-credit amendments would apply only to expenses paid or incurred after enactment.
The amendments made by this section shall apply to expenses paid or incurred after the date of the enactment of this Act.
Section 3 would repeal tax-code section 21 and create a replacement care credit in section 36C. Its heading describes the replacement as refundable. It would also insert a reference to section 36C into section 1324(b) of title 31. That referenced law is not reproduced, so the supplied text does not establish the full operation of refund payments.
3. Household and dependent care credit increased and made refundable
Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amending by inserting after section 36B the following new section: 36C. Expenses for household and dependent care services necessary for gainful employment
Section 1324(b) of title 31, United States Code, is amended by inserting 36C, after 36B,.
Subpart A of part IV of subchapter A of chapter 1 of such Code is amended by repealing section 21
The replacement care credit would start at 50% of eligible expenses. Before inflation adjustments, the percentage would fall by one percentage point for each $2,000, or part of $2,000, that adjusted gross income exceeds $15,000, but would never fall below 35%.
the term applicable percentage means 50 percent reduced (but not below 35 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000.
In the case of any taxable year beginning after 2024, the dollar amounts in this section shall be increased
Qualifying care recipients would include dependents under 13 under the cited tax-code definition. They would also include certain dependents and spouses physically or mentally unable to care for themselves, provided they share the taxpayer’s main home for more than half the tax year.
The term qualifying individual means— (A) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13, (B) a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)) who is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year, or (C) the spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year.
Eligible expenses would include household services and care services only when incurred to enable the taxpayer to work during a period with a qualifying care recipient. Overnight camp services outside the taxpayer’s household would be excluded.
The term employment-related expenses means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the taxpayer: (i) expenses for household services, and (ii) expenses for the care of a qualifying individual. Such term shall not include any amount paid for services outside the taxpayer’s household at a camp where the qualifying individual stays overnight.
Care outside the home would qualify for a dependent under 13, subject to the other eligibility rules. For other qualifying care recipients, it would qualify only if the person regularly spends at least eight hours each day in the taxpayer’s household.
Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer’s household shall be taken into account only if incurred for the care of— (i) a qualifying individual described in paragraph (1)(A), or (ii) a qualifying individual (not described in paragraph (1)(A)) who regularly spends at least 8 hours each day in the taxpayer’s household.
(A) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13
Outside-home care at a dependent care center would also require compliance with applicable state and local laws and regulations. A center would mean a facility caring for more than six nonresidents and receiving a fee, payment or grant for at least one person’s care, whether or not it operates for profit.
shall be taken into account only if— (i) such center complies with all applicable laws and regulations of a State or unit of local government, and (ii) the requirements of subparagraph (B) are met.
the term dependent care center means any facility which— (i) provides care for more than six individuals (other than individuals who reside at the facility), and (ii) receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
Before inflation adjustments, the credit could count up to $7,500 in annual expenses for one qualifying person or $15,000 for two or more. These are expense limits, not credit amounts. The applicable limit would be reduced by the total amount eligible for exclusion from gross income under tax-code section 129.
The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed— (1) $7,500 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or (2) $15,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 for the taxable year.
In the case of any taxable year beginning after 2024, the dollar amounts in this section shall be increased
Expenses counted toward the care credit generally could not exceed an unmarried taxpayer’s earned income. For married taxpayers, they generally could not exceed the lower of the two spouses’ earned incomes.
Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed— (A) in the case of an individual who is not married at the close of such year, such individual’s earned income for such year, or (B) in the case of an individual who is married at the close of such year, the lesser of such individual’s earned income or the earned income of his spouse for such year.
For the earned-income limit, a qualifying spouse who is a full-time student or unable to care for themselves would be treated as working during qualifying months. Before inflation adjustments, that spouse would be assigned at least $250 in monthly earned income for one qualifying care recipient or $500 for two or more. The student definition requires full-time attendance during each of five calendar months in the tax year.
In the case of a spouse who is a student or a qualifying individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than— (A) $250 if subsection (c)(1) applies for the taxable year, or (B) $500 if subsection (c)(2) applies for the taxable year.
The term student means an individual who during each of 5 calendar months during the taxable year is a full-time student at an educational organization.
The term educational organization means an educational organization described in section 170(b)(1)(A)(ii).
In the case of any taxable year beginning after 2024, the dollar amounts in this section shall be increased
The replacement credit’s dollar amounts would receive inflation adjustments for tax years beginning after 2024. The formula would use the cited tax-code cost-of-living adjustment with 2023 substituted for its 2016 base year. Increases would be rounded to the nearest $10.
In the case of any taxable year beginning after 2024, the dollar amounts in this section 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 2023 for calendar year 2016 in subparagraph (A)(ii).
If any increase under paragraph (1) is not a multiple of $10, such increase shall be rounded to the nearest multiple of $10.
Married taxpayers generally would have to file jointly to receive the care credit. A person legally separated under a divorce or separate-maintenance decree would be treated as unmarried.
If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and his spouse file a joint return for the taxable year.
An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married.
A married person filing separately could also be treated as unmarried if they maintain a home that is a qualifying person’s main home for more than half the year, pay more than half its upkeep costs, and have no spouse living in the household during the final six months of the year.
If— (A) an individual who is married and who files a separate return— (i) maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and (ii) furnishes over half of the cost of maintaining such household during the taxable year, and (B) during the last 6 months of such taxable year such individual’s spouse is not a member of such household, such individual shall not be considered as married.
For children covered by the cited special dependency rule, a child under 13 or unable to care for themselves would be treated as a qualifying individual for the custodial parent’s care credit, not the noncustodial parent’s. The bill relies on existing law to define when that rule applies and who is the custodial parent.
If— (A) section 152(e) applies to any child with respect to any calendar year, and (B) such child is under the age of 13 or is physically or mentally incapable of caring for himself, in the case of any taxable year beginning in such calendar year, such child shall be treated as a qualifying individual described in subparagraph (A) or (B) of subsection (b)(1) (whichever is appropriate) with respect to the custodial parent (as defined in section 152(e)(4)(A)), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
A person would not satisfy the shared-main-home requirement if their relationship with the taxpayer violated local law at any time during the taxpayer’s tax year.
An individual shall not be treated as having the same principal place of abode of the taxpayer if at any time during the taxable year of the taxpayer the relationship between the individual and the taxpayer is in violation of local law.
The care credit would exclude payments to someone for whom the taxpayer or spouse could claim the cited dependent deduction. It would also exclude payments to the taxpayer’s own child if that child is under 19 at the end of the tax year in which the services are performed.
No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual— (A) with respect to whom, for the taxable year, a deduction under section 151(c) (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or his spouse, or (B) who is a child of the taxpayer (within the meaning of section 152(f)(1)) who has not attained the age of 19 at the close of the taxable year. For purposes of this paragraph, the term taxable year means the taxable year of the taxpayer in which the service is performed.
Tax returns claiming the care credit generally would need the provider’s name, address and taxpayer identification number. For organizations described in section 501(c)(3) and exempt under section 501(a), only the name and address would be required. Missing provider information could be excused if the taxpayer showed due diligence in attempting to provide it. Each qualifying care recipient’s taxpayer identification number would also be required.
No credit shall be allowed under subsection (a) for any amount paid to any person unless— (A) the name, address, and taxpayer identification number of such person are included on the return claiming the credit, or (B) if such person is an organization described in section 501(c)(3) and exempt from tax under section 501(a), the name and address of such person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
No credit shall be allowed under this section with respect to any qualifying individual unless the TIN of such individual is included on the return claiming the credit.
The Secretary would be required to issue regulations or other guidance needed to implement the replacement care credit. Section 3’s amendments would apply to tax years beginning after its enactment; the separate inflation formula would not itself make the credit effective for earlier tax years.
The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this section.
In the case of any taxable year beginning after 2024, the dollar amounts in this section shall be increased
The bill would redirect several existing statutory references from section 21 to section 36C. Some specifically redirect section 21(e) references to section 36C(e), which this bill uses for inflation adjustments. It also refers to changes to sections 45F and 129 described as made by this Act; the supplied text does not include those underlying changes, so their intended operation is uncertain.
The following sections of such Code are each amended by striking section 21(e) and inserting section 36C(e). (A) Section 23(f)(1). (B) Section 35(g)(6). (C) Section 129(a)(2)(C), as amended by this Act.
(e) Inflation adjustment
Section 45F(C)(1)(A)(iv) of such Code, as added by this Act, is amended by striking section 21(b)(1)(A) and inserting section 36C(b)(1)(A).
The supplied official-actions snapshot, updated May 5, 2025, records introduction in the House and referral to the House Committee on Ways and Means on February 6, 2025. This snapshot does not establish what happened afterward.
Source snapshot updated 2025-05-05T15:55:15Z. 2025-02-06: Referred to the House Committee on Ways and Means. 2025-02-06: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-02-06. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for a particular recipient or place was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials. Formal earmark disclosures and accompanying materials are not supplied.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
None identified in the reviewed text
No materially narrow carve-out, special exemption or preferential treatment warranting a separate finding was identified after reviewing the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials.
Full text preserved for this analysis. Legislative record snapshot: May 5, 2025. How PlainBill uses AI