Makes the Child and Dependent Care Tax Credit (CDCTC) larger and changes how it is calculated. The bill raises some dollar limits, creates new income phaseouts and percentage rules, adds an inflation adjustment, clarifies rules for married people who file separately, makes the credit refundable for certain residents, and sets an effective date for the changes.

The change is intended to increase benefits for families who pay for child or dependent care — especially lower-income households with little or no income tax liability — but will require new IRS guidance and slightly more complex calculations for taxpayers and return preparers.