subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following: Sec. 36C. Expenses for household and dependent care services necessary for gainful employment. . (12) The table of sections for subpart A of such part IV is amended by striking the item relating to section 21. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 3. Enhancement of the Child and Dependent Care Tax Credit (a) In general Section 36C of the Internal Revenue Code of 1986, as redesignated by section 2 of this Act, is amended— (1) in paragraph (1) of subsection (a), by striking 35 percent reduced (but not below 20 percent) and inserting 50 percent reduced (but not below 35 percent) , (2) by redesignating subsection (f) as subsection (g), and (3) by inserting after subsection (e) the following new subsection: (f) Inflation adjustment (1) In general In the case of any taxable year beginning after 2017, each of the dollar amounts in subsections (a)(2) and (c) 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. (2) Rounding If any increase determined under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50. . (b) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 4. Increase in exclusion for employer-provided dependent care assistance (a) In general Subparagraph (A) of section 129(a)(2) of the Internal Revenue Code of 1986 (relating to dependent care assistance programs) is amended by striking $5,000 ($2,500 and inserting $7,500 (half such dollar amount . (b) Inflation adjustment Paragraph (2) of section 129(a) of such Code is amended by