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139 STAT. 214 PUBLIC LAW 119–21—JULY 4, 2025 (2)(A)(i) of subsection (b) 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 2001’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof. ‘‘(2) ROUNDING.—If any amount as increased under para- graph (1) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10. ‘‘(3) SPECIAL RULE FOR REFUNDABLE PORTION.—In the case of the dollar amount in subsection (a)(4), paragraph (1) shall be applied— ‘‘(A) by substituting ‘2025’ for ‘2002’ in the matter preceding subparagraph (A), and ‘‘(B) by substituting ‘calendar year 2024’ for ‘calendar year 2001’ in subparagraph (B) thereof.’’. (c) EXCLUSION OF REFUNDABLE PORTION OF CREDIT FROM CARRYFORWARD.—Section 23(c)(1) is amended by striking ‘‘credit allowable under subsection (a)’’ and inserting ‘‘portion of the credit allowable under subsection (a) which is allowed under this subpart’’. (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2024. SEC. 70403. RECOGNIZING INDIAN TRIBAL GOVERNMENTS FOR PUR- POSES OF DETERMINING WHETHER A CHILD HAS SPE- CIAL NEEDS FOR PURPOSES OF THE ADOPTION CREDIT. (a) IN GENERAL.—Section 23(d)(3) is amended— (1) in subparagraph (A), by inserting ‘‘or Indian tribal government’’ after ‘‘a State’’, and (2) in subparagraph (B), by inserting ‘‘or Indian tribal government’’ after ‘‘such State’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2024. SEC. 70404. ENHANCEMENT OF THE DEPENDENT CARE ASSISTANCE PROGRAM. (a) IN GENERAL.—Section 129(a)(2)(A) is amended by striking ‘‘$5,000 ($2,500’’ and inserting ‘‘$7,500 ($3,750’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2025. SEC. 70405. ENHANCEMENT OF CHILD AND DEPENDENT CARE TAX CREDIT. (a) IN GENERAL.—Paragraph (2) of section 21(a) is amended to read as follows: ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For purposes of paragraph (1), the term ‘applicable percentage’ means 50 per- cent— ‘‘(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 26 USC 129 note. 26 USC 23 note. 26 USC 23 note. Applicability. Determination.