Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 471(c), renumbered section 44A of this title as this section.
Final rules 1
(a) Allowance of credit
Amended 1981
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(a), designated existing provisions as par. (1), substituted “the applicable percentage” for “20 percent” in par. (1) as so designated, and added par. (2).
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(1) In general In the case of an individual for which there are 1 or more qualifying individuals (as defined in subsection (b)(1)) with respect to such individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by such individual during the taxable year.
Amended 1984, 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 203(a), substituted “In the case of an individual for which there are 1 or more qualifying individuals (as defined in subsection (b)(1)) with respect to such individual” for “In the case of an individual who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1))”.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(2), (3), substituted “subsection (b)(1)” for “subsection (c)(1)” and “subsection (b)(2)” for “subsection (c)(2)”.
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(2) Applicable percentage defined For purposes of paragraph (1), the term “applicable percentage” means 50 percent—
Amended 2001, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21 amended par. (2) generally. Prior to amendment, text read as follows: “For purposes of paragraph (1), the term ‘applicable percentage’ means 35 percent reduced (but not below 20 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.”
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 204(b), substituted “35 percent” for “30 percent” and “$15,000” for “$10,000”.
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(A) 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, and
(B) further reduced (but not below 20 percent) by 1 percentage point for each $2,000 ($4,000 in the case of a joint return) or fraction thereof by which the taxpayer’s adjusted gross income for the taxable year exceeds $75,000 ($150,000 in the case of a joint return).
(b) Definitions of qualifying individual and employment-related expenses For purposes of this section—
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsec. (c) as (b). Former subsec. (b), which provided that the credit allowed by subsec. (a) could not exceed the amount of the tax imposed by this chapter for the taxable year reduced by the sum of the credits allowable under sections 33, 37, 38, 40, 41, 42, and 44, was struck out.
(1) Qualifying individual The term “qualifying individual” means—
(A) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13,
Amended 1986, 1988
- 1988 Pub. L. 100-485 Pub. L. 100–485, § 703(a), substituted “age of 13” for “age of 15”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 104(b)(1)(A), substituted “section 151(c)” for “section 151(e)”.
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(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
Amended 2005
- 2005 Pub. L. 109-135 Pub. L. 109–135 inserted “(as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B))” after “dependent of the taxpayer”.
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(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.
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Amended 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 203(b), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “The term ‘qualifying individual’ means—
“(A) a dependent of the taxpayer who is under the age of 13 and with respect to whom the taxpayer is entitled to a deduction under section 151(c),
“(B) a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or
“(C) the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself.”
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(2) Employment-related expenses
Amended 1983
- 1983 Pub. L. 98-21 Pub. L. 98–21 substituted “relating to credit for the elderly and the permanently and totally disabled” for “relating to credit for the elderly”.
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(A) In general 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:
Amended 1987
- 1987 Pub. L. 100-203 Pub. L. 100–203 inserted at end “Such term shall not include any amount paid for services outside the taxpayer’s household at a camp where the qualifying individual stays overnight.”
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(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.
(B) Exception 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—
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(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.
(C) Dependent care centers Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer’s household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if—
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(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.
(D) Dependent care center defined For purposes of this paragraph, the term “dependent care center” means any facility which—
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(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).
(c) Dollar limit on amount creditable The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed—
Amended 1984, 1988
- 1988 Pub. L. 100-485 Pub. L. 100–485, § 703(b), inserted at end: “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.”
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsec. (d) as (c). Former subsec. (c) redesignated (b).
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(1) $3,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or
Amended 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 204(a)(1), substituted “$3,000” for “$2,400”.
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(2) $6,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year.
Amended 1981, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16, § 204(a)(2), substituted “$6,000” for “$4,800”.
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(c), designated existing provisions as cl. (i) and added cl. (ii).
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(d), added subpars. (C) and (D).
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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.
(d) Earned income limitation
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsec. (e) as (d). Former subsec. (d) redesignated (c).
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(1) In general 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—
Amended 1981
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(b)(1)(A), substituted “$2,400” for “$2,000”.
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(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.
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(2) Special rule for spouse who is a student or incapable of caring for himself 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—
Amended 1981, 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(4), substituted “subsection (b)(1)(C)” for “subsection (c)(1)(C)” in introductory provisions.
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(b)(1)(B), substituted “$4,800” for “$4,000”.
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(A) $250 if subsection (c)(1) applies for the taxable year, or
Amended 1984, 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 418(b)(1), substituted “$250” for “$200”.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(5), substituted “subsection (c)(1)” for “subsection (d)(1)”.
(B) $500 if subsection (c)(2) applies for the taxable year.
Amended 1984, 2002
- 2002 Pub. L. 107-147 Pub. L. 107–147, § 418(b)(2), substituted “$500” for “$400”.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(6), substituted “subsection (c)(2)” for “subsection (d)(2).
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules For purposes of this section—
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d).
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(1) Place of abode 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.
Amended 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 203(c), amended heading and text of par. (1) generally. Prior to amendment, text read as follows: “An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for such period is furnished by such individual (or, if such individual is married during such period, is furnished by such individual and his spouse).”
(2) Married couples must file joint return 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.
Amended 1981
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(b)(2)(A), substituted “$200” for “$166”.
- 1981 Pub. L. 97-34 Pub. L. 97–34, § 124(b)(2)(B), substituted “$400” for “$333”.
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(3) Marital status An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married.
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(4) Certain married individuals living apart 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.
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(5) Special dependency test in case of divorced parents, etc. If—
Amended 1984, 2004, 2007
- 2007 Pub. L. 110-172 Pub. L. 110–172 substituted “section 152(e)(4)(A)” for “section 152(e)(3)(A)” in concluding provisions.
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 207(2), struck out “paragraph (2) or (4) of” before “section 152(e)” in subpar. (A) and substituted “as defined in section 152(e)(3)(A)” for “within the meaning of section 152(e)(1)” in concluding provisions.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(7), substituted “subsection (b)(1)” for “subsection (c)(1)” in provisions following subpar. (B).
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 423(c)(4), amended par. (5) generally, substituting subpars. (A) and (B) reading:
“(A) paragraph (2) or (4) of section 152(e) applies to any child with respect to any calendar year, and
“(B) such child is under the age of 15 or is physically or mentally incapable of caring for himself,”
for former provisions:
“(A) a child (as defined in section 151(e)(3)) who is under the age of 15 or who is physically or mentally incapable of caring for himself receives over half of his support during the calendar year from his parents who are divorced or legally separated under a decree of divorce or separate maintenance or who are separated under a written separation agreement, and
“(B) such child is in the custody of one or both of his parents for more than one-half of the calendar year.”
and substituted in concluding text “(whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1)), and shall not be treated as a qualifying individual with respect to the noncustodial parent” for “, as the case may be, with respect to that parent who has custody for a longer period during such calendar year than the other parent, and shall not be treated as being a qualifying individual with respect to such other parent.”
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(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,
Amended 1988
- 1988 Pub. L. 100-485 Pub. L. 100–485, § 703(a), substituted “age of 13” for “age of 15”.
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.
(6) Payments to related individuals 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
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 104(b)(1)(A), substituted “section 151(c)” for “section 151(e)”.
(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. needs § 152(f)(1)
Amended 1986, 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311, § 207(3), substituted “section 152(f)(1)” for “section 151(c)(3)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 104(b)(1)(B), substituted “section 151(c)(3)” for “section 151(e)(3)”.
For purposes of this paragraph, the term “taxable year” means the taxable year of the taxpayer in which the service is performed.
(7) Student 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.
(8) Educational organization The term “educational organization” means an educational organization described in section 170(b)(1)(A)(ii).
(9) Identifying information required with respect to service provider No credit shall be allowed under subsection (a) for any amount paid to any person unless—
Amended 1988
- 1988 Pub. L. 100-485 Pub. L. 100–485, § 703(c)(1), added par. (9).
(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.
(10) Identifying information required with respect to qualifying individuals 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.
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188 added par. (10).
(f) Regulations The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
Amended 1978, 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsecs. (f) and (g) as (e) and (f), respectively.
- 1978 Pub. L. 95-600 Pub. L. 95–600 substituted provision disallowing a credit for any amount paid by a taxpayer to an individual with respect to whom, for the taxable year, a deduction under section 151(e) is allowable either to the taxpayer or his spouse or who is a child of the taxpayer who has not attained the age of 19 at the close of the taxpayer year and defining “taxpayer year” for provision disallowing a credit for any amount paid by the taxpayer to an individual bearing a relationship described in section 152(a)(1) through (8), or a dependent described in section 152(a)(9), except that a credit was allowed for an amount paid by a taxpayer to an individual with respect to whom, for the taxable year of the taxpayer in which the service was performed, neither the taxpayer nor his spouse was entitled to a deduction under section 151(e), provided the service constituted employment within the meaning of section 3121(b).
(g) Special rules for 2021 In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022—
Amended 1984, 2021
- 2021 Pub. L. 117-2 Pub. L. 117–2, § 9631(a), added subsec. (g).
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(c)(1), redesignated subsecs. (f) and (g) as (e) and (f), respectively.
(1) Credit made refundable 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).
(2) Increase in dollar limit on amount creditable Subsection (c) shall be applied—
(A) by substituting “$8,000” for “$3,000” in paragraph (1) thereof, and
(B) by substituting “$16,000” for “$6,000” in paragraph (2) thereof.
(3) Increase in applicable percentage Subsection (a)(2) shall be applied—
(A) by substituting “50 percent” for “35 percent”, and
(B) by substituting “$125,000” for “$15,000”.
(4) Application of phaseout to high income individuals
(A) In general Subsection (a)(2) shall be applied by substituting “the phaseout percentage” for “20 percent”.
(B) Phaseout percentage 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.
(h) Application of credit in possessions
Amended 2021
- 2021 Pub. L. 117-2 Pub. L. 117–2, § 9631(b), added subsec. (h).
(1) Payment to possessions with mirror code tax systems The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning in or with 2021. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
(2) Payments to other possessions The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of this section with respect to taxable years beginning in or with 2021 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan, which has been approved by the Secretary, under which such possession will promptly distribute such payments to its residents.
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(3) Coordination with credit allowed against United States income taxes In the case of any taxable year beginning in or with 2021, no credit shall be allowed under this section to any individual—
(A) to whom a credit is allowable against taxes imposed by a possession with a mirror code tax system by reason of this section, or
(B) who is eligible for a payment under a plan described in paragraph (2).
(4) Mirror code tax system For purposes of this subsection, the term “mirror code tax system” means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
(5) Treatment of payments For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.