portion Clause (i) of section 24(d)(1)(B) of the Internal Revenue Code of 1986 is amended to read as follows: (i) 45 percent of the taxpayer’s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year, or . (b) Effective date The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2016. 5. Adjustments for inflation (a) In general Section 24 of the Internal Revenue Code of 1986, as amended by sections 3 and 4, is amended by adding at the end the following new subsection: (i) Inflation adjustments (1) Credit amount generally In the case of any taxable year beginning in a calendar year after 2016, the $1,000 amount contained in subsection (a) 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 2010 for calendar year 1992 in subparagraph (B) thereof. (2) Young child credit amount In the case of any taxable year beginning in a calendar year after 2017, the $3,600 amount contained in subsection (h)(1) 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 2016 for calendar year 1992 in subparagraph (B) thereof. (3) Rounding Any increase determined under paragraph (1) or (2) shall be rounded to the nearest multiple of $50. . (b) Effective date The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2016.