of credit for small employer pension plan startup costs (a) Increase in credit percentage for smaller employers Section 45E(e) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (4) Increased credit for certain small employers In the case of an employer which would be an eligible employer under subsection (c) if section 408(p)(2)(C)(i) was applied by substituting 50 employees for 100 employees , subsection (a) shall be applied by substituting 100 percent for 50 percent . . (b) Additional credit for employer contributions by certain small employers Section 45E of such Code is amended by adding at the end the following new subsection: (f) Additional credit for employer contributions by certain eligible employers (1) In general In the case of an eligible employer, the credit allowed for the taxable year under subsection (a) (determined without regard to this subsection) shall be increased by an amount equal to the applicable percentage of employer contributions (other than any elective deferrals (as defined in section 402(g)(3))) by the employer to an eligible employer plan (other than a defined benefit plan (as defined in section 414(j))). (2) Limitations (A) Dollar limitation The amount determined under paragraph (1) (before the application of subparagraph (B)) with respect to any employee of the employer shall not exceed $1,000. (B) Credit phase-in In the case of any eligible employer which had for the preceding taxable year more than 50 employees, the amount determined under paragraph (1) (without regard to this subparagraph) shall be reduced by an amount equal to the product of— (i) the amount otherwise so determined under paragraph (1), multiplied by (ii) a percentage equal to 2 percentage points for each employee of the employer for the preceding taxable year in excess of 50 employees. (3) Applicable percentage For purposes of this section, the applicable percentage for the taxable year during which the eligible employer plan is established shall be 100 percent,