1. Expenses for household and elder care services necessary for gainful employment (a) In general Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 25E. Expenses for household and elder care services necessary for gainful employment (a) Allowance of credit (1) In general In the case of an individual for which there are one 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. (2) Applicable percentage defined 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. (b) Definitions of qualifying individual and employment-Related expenses For purposes of this section— (1) Qualifying individual The term qualifying individual means an individual who— (A) has attained age 50, and (B) is one of the following: (i) An individual who bears a relationship to the taxpayer described in subparagraph (C) or (D) of section 152(d)(2) (relating to fathers, mothers, and ancestors). (ii) An individual would be a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1) and (b)(2)) as a qualifying relative described in section 152(d)(1) if— (I) in lieu of subparagraphs (B) and (C) thereof the following applied with respect to the individual: (aa) the taxpayer has provided over one-half of the individual’s support for the calendar year in which such taxable year begins and each of the preceding 4 taxable years, and (bb) the individual’s modified adjusted gross income for the calendar year in which