A bill to facilitate and encourage the implementation by States of child day care services programs conducted pursuant to title XX of the Social Security Act, and to promote the employment of welfare recipients in the provision of child day care services.

Amends Title XX (Grants to States for Services) to prohibit the withholding of any funds to which a State is entitled with respect to expenditures made during the calendar quarter ending December 31, 1975. Sets new limitations upon the amount of funds payable to a State for providing services.

Directs the States to increase the employment of welfare recipients and other low-income persons in jobs related to the provision of child day care services.

Increases to 80 percent the Federal share of expenditures for State day care programs under Title XX.

Amends the Internal Revenue Code to limit to $1,000 the tax credit allowed with respect to Federal welfare recipient employment incentive expenses paid/or incurred by the taxpayer during the taxable year. Authorizes a payment in lieu of credit to tax exempt organizations.