- The child and dependent care credit has been increased from 35% to 50% of eligible expenses for 2021 only and is also refundable.
- The credit is now worth up to $8,000 for one qualifying individual and up to $16,000 for two or more (an increase from being worth up to $3,000 for one qualifying individual and $6,000 for two or more).
- The phase-out to reduce the credit begins when adjusted gross income reaches $125,000. After adjusted gross income reaches $125,000, the credit percentage is reduced by one point for each $2,000 of adjusted gross income over $125,000, until it reaches 20%. After adjusted gross income reaches $400,000, the credit percentage is reduced by one point for each $2,000 of adjusted gross income over $400,000, until it reaches 0.
- The exclusion for employer-provided dependent care assistance has been increased to $10,500 for 2021.