(a) For the purposes of this section, the term:

(1) "Base year" means the calendar year beginning January 1, 2018, or the calendar year beginning one calendar year before the calendar year in which the new dollar amount of a deduction or exemption shall become effective, whichever is later.

(1A)(A) "Child development facility" shall have the same meaning as provided in § 7-2031(3) and licensed pursuant to § 7-2034 unless exempt pursuant to § 7-2033(5).

(B) This paragraph shall apply for tax years beginning on or after January 1, 2018.

(2) "Consumer Price Index" means the average of the Consumer Price Index for All Urban Consumers for the Washington-Arlington-Alexandria, DC-MD-VA-WV Metropolitan Statistical Area (or such successor metropolitan statistical area that includes the District), or any successor index, as of the close of the 12-month period ending on July 31 of such calendar year.

(2A) "Cost-of-living adjustment" means an amount, for any calendar year, equal to the dollar amount set forth in this section multiplied by the difference between the Consumer Price Index for the preceding calendar year and the Consumer Price Index for the base year, divided by the Consumer Price Index for the base year.

(3) "Eligible child" means a dependent, claimed by a taxpayer, who has not reached the age of 4 years by September 30 of the taxable year.

(4) "Eligible child care expenses" means payments made by a taxpayer to a child development facility for child care services of an eligible child during the taxable year but does not include any payments for child care services provided after August 31 of the taxable year of an eligible child who meets the age requirement for enrollment under § 38-273.02(a).

(b)(1) For taxable years beginning after December 31, 2017, a taxpayer shall be allowed a credit against the tax imposed under this subchapter for eligible child care expenses paid by the taxpayer.

(2)(A) The amount of the credit shall be the lesser of:

(i) The total amount of all eligible child care expenses paid by the taxpayer in the taxable year; or

(ii) The limit per eligible child, as set forth in subparagraph (B) of this paragraph, multiplied by the number of the taxpayer's eligible children.

(B)(i) For the taxable years beginning on January 1, 2018, and January 1, 2019, the limit per eligible child shall be $1,000.

(ii) For each taxable year beginning after December 31, 2019, the limit per eligible child set forth in sub-subparagraph (i) of this subparagraph shall be increased annually pursuant to the cost-of-living adjustment (if the adjustment does not result in a multiple of $5, rounded down to the next multiple of $5).

(3) The credit claimed under this section in a taxable year may exceed the taxpayer's tax liability under this subchapter for that taxable year and shall be refundable to the taxpayer claiming the credit.

(c) In the case of a return made for a fractional part of a taxable year, the credit shall be reduced to an amount that bears the same ratio to the full credit provided as the number of months in the period for which the return is made to 12 months.

(d) Notwithstanding subsection (b) of this section, a taxpayer shall not be eligible to receive a credit under this section if:

(1) The taxpayer does not claim the eligible child as a dependent on the taxpayer's federal and District income tax returns for that taxable year;

(2) A person other than the taxpayer claimed the eligible child as a dependent on his or her federal and District income tax returns for that taxable year;

(3) Any child care subsidies authorized under Chapter 4 of Title 4 during the taxable year are received or paid on behalf of an eligible child of the taxpayer;

(4) A person other than the taxpayer received a credit under this section for the same taxable year for the same eligible child; or

(5) The taxpayer's District taxable income for the taxable year exceeds the following amounts and increased annually pursuant to the cost-of-living adjustment (if the adjustment does not result in a multiple of $100, rounded down to the next multiple of $100):

(A) For the taxable year ending December 31, 2018:

(i) Single and head of household: $750,000;

(ii) Married filing jointly: $750,000; or

(iii) Married filing separately: $375,000."

(B) For taxable years beginning on or after January 1, 2019:

(i) Single and head of household: $150,000;

(ii) Married filing jointly: $150,000; or

(iii) Married filing separately: $75,000.

(e) The Chief Financial Officer may issue rules regarding the records required to be maintained and provided by a taxpayer and a child development facility to substantiate any credits claimed under this section.

(f) [Repealed].

(Oct. 30, 2018, D.C. Law 22-168, § 7262(b), 65 DCR 9388; Sept. 11, 2019, D.C. Law 23-16, § 7002(b), 66 DCR 8621.)

Section 7263 of D.C. Law 22-168 provided that the creation of this section by section 7262(b) of D.C. Law 22-168 shall apply as of January 1, 2018.

For temporary (90 days) creation of this section, see § 7262(b) of Fiscal Year 2019 Budget Support Congressional Review Emergency Act of 2018 (D.C. Act 22-458, Oct. 3, 2018, 65 DCR 11212).

For temporary (90 days) creation of this section, see § 7262(b) of Fiscal Year 2019 Budget Support Emergency Act of 2018 (D.C. Act 22-434, July 30, 2018, 65 DCR 8200).