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State Child Care Tax Credits

Pathways to High-Quality Child Care: The Workforce Investment Credit

Economic Growth Depends on Child Care

Child Care Tax Incentives Can Help Support Employers and Parents

 Child Care Financing

Tax Credit Toolbox: Advocacy Tools

You Can Use

Advocacy at Work: Sample Documents

Arkansas: Infographics - Workforce Tax Credit Infographic; High-Quality Early Learning Matters

Colorado: Support HB 19-1005, the Early Childhood Educator Credit, Colorado Children's Campaign

Minnesota: Infographic - High-Quality Early Learning Matters; Economic Impact of Child Care

New York State Employer Tax Credit (NYS Council on Children & Families)

New York State Child Care Tax Credit for Parents (NYS Council on Children & Families)

The Business Case for Investing in Child Care: Economic Impact in the U.S.

    Need More Information on Child Care Economic Impact?

    Check out CED's Child Care in State Economies: 2024 Update

    Employers: State Employer Child Care Tax Credits

    • 24 states have an employer child care tax credit or a tax incentive for employers. These credits seek to incent employers to provide child care directly, contract within their community for child care for their employees, or help either expand the supply of child care or make it more affordable for their employees.

    Parents: State Dependent Care Tax Credits

    • 28 states have a dependent care tax credit to help parents with the cost of child care. Another 3 states (Idaho, Massachusetts, and Virginia) allow parents a tax deduction for some of their child care expenses.  

    Tax Terms in Brief

    Tax Credit.  A tax credit is applied against taxes owed. In this way, the amount of taxes that would otherwise be paid is reduced dollar for dollar.

    Tax Deduction. A tax deduction lowers taxable income against which taxes are applied. 

    For example: 

    Consider a taxpayer in the 35% tax bracket:

    • a $100 tax deduction reduces taxes owed by $35 (35% of the amount spent).
    • a $100 tax credit reduces taxes owed by $100 (100% of the amount spent).

    Refundability.  When a tax credit is refundable, it means that a taxpayer receives a check in the amount that exceeds the level of taxes that are owed.

    For Example:

    A taxpayer who is eligible for a tax credit worth $500 and who owes only $100 in taxes can only claim $100 of the credit.

    If the same tax credit were refundable, the taxpayer could claim the full $500 because $400 would be sent to the taxpayer as a refund).


     

    Map of State Child Care Tax Credits for Parents and Employers

    Parents

    State Dependent Care Tax Credits

     

    Employers

    State Employer Child Care Tax Credits

    Early Childhood Financing Studies and Reports

    The Basics: Revenues & Financing Options

    What are tax expenditures? Tax Policy Center (Urban Institute & Brookings Institution)

    Estimates of Federal Tax Expenditures, Joint Committee on Taxation (Annual Estimates)

    Summary of State Revenue Sources (Tax Policy Center, (Urban Institute & Brookings Institution)

    State Tax Expenditure and Budget Estimate State-by-State Compilation (September 2020)

    Federal Child Care Related Tax Credits

    U.S. Census Bureau

    Monthly Comparisons for Selected State Tax Collections

    State Innovative Partnerships with Employers