CORPORATE TAX INCENTIVES FOR EMPLOYER-SUPPORTED CHILD CARE ENACTED LEGISLATION
Arizona
Arizona Revised Statutes 43-1163 -- Provides corporate tax credits for employers providing child care facilities or services for employees. Employers that purchase or remodel facilities can claim a credit of the lesser of $15,000 or 50 percent, in lieu of depreciation or amortization allowances. Employers who provide child care or resource and referral services are eligible for a credit of the lesser of $5,000 or 30 percent of the net costs.
Arizona Revised Statutes 43-1130 -- Allows taxpayers who operate child care facilities primarily for their employees' children to depreciate the cost of the facility over 24 months, thereby lowering their taxes. Taxpayers operating child care facilities for profit may amortize, instead of depreciate, over a 60-month period any expenditure made to purchase, construct, renovate, or remodel the facilities or equipment.
Arkansas
1995 Ark. Acts, Act 850 -- Provides an income tax credit for a business which operates a child care facility for its employees. Repeals the sales and use tax exemption for construction materials, but allows for a refund. Removes the restriction that the facility must have a certain average daily attendance of employee children.
1993 Ark. Acts, Act 820 -- Exempts construction materials and furnishings purchased for the initial construction of an employee child care center from sales and use tax. Allows an income tax credit of 3.9 percent of the annual salaries of the employees who provide care.
California
1998 Cal. Stats., Chap. 323, Secs. 25, 26 - Extends the employer tax credits for child care construction startup costs, information and referral services costs, and contributions to a qualified care plan.
1994 Cal. Stats., Chap. 748 -- Establishes caps and limits to the state's personal and corporate income tax credit for child care start-up costs, information and referral services, child care facility construction costs and contributions to a qualified care plan. Extends the credits.
1992 Cal. Stats., Chap. 816 -- Authorizes a tax credit for initial expenses of child care programs developed primarily for the taxpayer's employees and tenants. Requires building owners and developers to be informed of the credits available.
1991 Cal. Stats., Chap. 476 -- Extends until 1995 tax credits for child care construction startup costs, information and referral services costs, and contributions to a qualified care plan. Requires the Child Development Programs Advisory Committee to coordinate outreach efforts to inform employers about the tax credits.
1988 Cal. Stats., Chap. 1239 -- Allows a credit against the corporate income tax liability equal to 30 percent of either or both of (1) the cost paid or incurred for startup expenses of establishing a child care program or constructing a child care facility in California to be used primarily by the children of the taxpayer's employees, or (2) the cost paid or incurred by the taxpayer for contributions to California child care information and referral services. The amount of the credit allowed cannot exceed $30,000 for any taxable year. The credits are valid for tax years beginning before 1992.
Colorado
1990 Colo. Sess. Laws, Chap. 220 -- Directs the Department of Social Services to assist employers with onsite center licensing and establish separate standards for onsite care. Adds monetary or in-kind contributions to promote child care as permissible contributions to enterprise zones which qualify for existing tax credit programs.
Connecticut
1996 Conn. Acts, P.A. 262, Sec. 1 - Creates a new child care tax credit at 60 percent of expenses. Simplifies reporting requirements. Allows the state's 40 percent business child care tax credit to apply to child care facilities on or off site. Requires several state agencies to work with business-related organizations on marketing strategies to promote the tax credits.
1996 Conn. Acts, P.A. 262, Sec. 7 -- Authorizes a 40 percent tax credit for costs of businesses providing employee parent education classes, available once the child care tax credit has been exhausted. Requires the application to specify costs and the number of participants. Requires classes to provide certain child development information and referrals.
1988 Conn. Acts, P.A. 289 -- Expands the state's tax credit program for businesses establishing day care facilities for employees' children to include for-profit facilities. Up to 40 percent of the facilities' operating expenses may be credit against the employer's tax liability, but cannot exceed $20,000 in any income year. Formerly, only nonprofit day care centers qualified for the credit.
1987 Conn. Acts, P.A. 429 -- Increases from $250,000 to $1 million the cap on tax credits to businesses that subsidize employee child care. Requires approval of applications giving preference to low-income workers. Expands eligibility to include care in the child's home and by a relative.
Florida
1998 Fla. Laws, Chap. 293, Secs. 4-5 -- Authorizes a tax credit for businesses of 50 percent of the startup costs of child care facilities and up to $50 per month for each child enrolled in the child care facility. Limits the total annual business tax credits for all child care costs to $50,000. Authorizes a credit against tax due or insurance premium taxes for child care facility startup costs and operation, and for payment of an employee's child care costs.
1985 Fla. Laws, Chaps. 85, 118 -- Provides a 100 per cent deduction for a child care facility's start-up costs from a corporation's net income for tax purposes. These start-up costs include expenditures for playground equipment, kitchen appliances and cooking equipment, and real property, including land and improvements, used to establish a child care facility.
Georgia
1999 Ga. Laws, Act 19 - Increases the income tax credit to 50 percent against tax liability for the cost of operating an employer-provided or employer-sponsored child care. Creates an income tax credit of 75 percent of the cost of operating an onsite child care center. Allows an employer who constructs an onsite children's care center to receive a 10 percent credit of the construction costs per year for ten years.
Kansas
1992 Kan. Sess. Laws, Chap. 124 -- Permanently extends child care income tax credits by removing the sunset date. Expands the program to include tax credits for child care referral services provided by businesses.
1989 Kan. Sess. Laws, Chap. 285 -- Provides a credit to taxpayers who pay for or provide child care services for their employees, or that provide facilities or necessary equipment for child care services. The credit is good for tax years 1989-1992. Employers who purchase or provide child care services for dependent children of their employees are eligible for a 30 percent tax credit for the amount spent. This credit cannot exceed $30,000 for any tax year. Employers are allowed a 50 percent credit for the amount spend in establishing a child care facility. This credit cannot exceed $45,000 for any tax year. The aggregate amount of child day care facility credits that may be claimed for any fiscal year cannot exceed $3 million.
Maine
1999 Me. Laws, Chap. 401, Sec. NNN - Allows a corporate tax credit of 30 percent of costs or $30,000 for investing in child care services.
1987 Me. Laws, Chap. 343, Sec. 5217 -- Employer/taxpayers are allowed a credit against the tax liability equal to the lowest of (1) $5,000, (2) 20 percent of costs incurred in providing day care service for employees' children, or (3) $100 per child of an employee enrolled on a full-time basis in day care service provided by the taxpayer. The credit used for a tax year may not exceed the tax due, but unused amounts may be carried back three years or forward 15 years.
Maryland
1996 Md. Laws, Chap. 492 -- Creates an employer tax credit for employers who hire AFDC recipients. Tax credit ranges from 10 percent to 30 percent of wages and from $400 to $600 in child care.
1988 Md. Laws, Chap. 641, Sec. 1 -- Authorizes local governments to grant property tax credits for certain child care centers. The credits would be granted for improvements to property owned by a business having at least 25 employees, and where the improvement contains an area set aside and dedicated exclusively for a registered or licensed child care center. The amount and duration of the credit is to be determined by the governing body.
Massachusetts
1990 Mass. Acts, Chap. 521 -- Allows the child care portion of a development to be taxed at the residential rate rather than the commercial rate imposed on the rest of the building.
Mississippi
1989 Miss. Laws, Chap. 524, Sec. 12 -- Grants a 25 percent tax credit to businesses that provide or contract out for child care for employees' children. If the employer provides child care, the credit covers expenses for staff, materials, equipment, and the construction and maintenance of a facility. The facility must have an average daily enrollment of no less than six children who are 12 years of age or less to be licensed. The Department of Health and the State Tax Commission will certify employers eligible for the credit.
Montana
1989 Mont. Laws, Chap. 706 -- Grants a 15 percent tax credit to an employer for amounts paid or incurred in providing or contracting out for child care for employees' children. The credit cannot exceed $1,250 of child care assistance actually provided to or on behalf of the employee.
Nevada
1997 Nev. Stats., Chap. 664 -- Allows a business tax credit not to exceed 50 percent of total tax liability to businesses that provide on-site child care or vouchers for licensed child care to employees earning 150 percent or less of the FPL. Exempts employers from liability relating to child care provided under certain conditions.
New Mexico
1986 N.M. Laws, Chap. 20, Sec. 52 -- Provides a 30 percent tax credit for a corporate taxpayer that pays for child care services for dependent children of an employee equal to 30 percent of the total expenses for child care services incurred and paid by the employer in the tax year. A corporate taxpayer that operates a nonprofit child care facility used primarily by the dependent children of the employees may also claim a corporate income tax credit in an amount equal to 30 percent of the net cost of operating the child care facility for the tax year. The credits cannot exceed $30,000 in any tax year, but any excess credit may be carried forward for three consecutive years.
Ohio
1997 Ohio HB 215, Sec. 5733.36 - Allows businesses to take a nonrefundable tax credit of 50% of the amount spent to offer subsidized licensed child care arrangements to employees in tax years 1999-2003.
1997 Ohio HB 215, Sec. 5733.37 - Allows a nonrefundable business tax credit for the lesser of $100,000 or 50 percent of the actual amount spent to establish a licensed, on-site child care center for employees. Allows any unused portion of the tax credit to be carried forward for up to five tax years.
1982 Ohio Revised Code, Sec. 5709.65 -- Entitles a qualified corporation operating within an enterprise zone, and reimbursing an employee for all or part of the cost of child care, to a tax credit. The credit shall not exceed $300 per child and is available for the first two years of employment.
Oklahoma
1998 Okla. Sess. Laws, Chap. 386, Secs. 4-5 -- Authorizes an employer tax credit for 20 percent of eligible expenses for qualifying child care services. Defines qualifying services as child care programs that are accredited by a national association recognized by the Department of Human Services. Authorizes a 20 percent tax credit to businesses primarily engaged in providing child care services for expenses incurred to comply with national accrediting association standards, which would not have been incurred to comply with state licensing requirements.
Oregon
1991 Or. Laws, Chap. 928 -- Allows a business tax credit for contributions to school district child development programs.
1987 Or. Laws, Chap. 682 -- Provides three corporate tax credits for employer-sponsored child care. The credits include: a 50 percent tax credit for child care assistance paid for or provided to an employee, not to exceed $2,500 per taxable year; a 50 percent tax credit for amounts paid or incurred during the taxable year to provide information and referral services to help employees obtain child care; and a tax credit to an employer who constructs, renovates, or in other ways improves real property to be used primarily as a child care facility. The facility credit shall be the lesser of (1) $2,500 times the number of full-time employees employed by the taxpayer, (2) 50 percent of the cost of the construction, renovation, or other improvement, or (3) $100,000.
Pennsylvania
1985 Pa. Laws, Act 102, Sec. 4 -- An employment incentive payment may be claimed by an employer who hires any person who is receiving AFDC, or who is classified as chronically or transitionally needy at the time of hire. If the employer provides or pays for child care services for the children of the employee, the taxpayer shall be eligible to receive an additional employment incentive payment of up to $600 during the first year of employment, $500 during the second year of employment, and $400 during the third year of employment. Total incentive payments shall not exceed 90 percent of the total taxes paid by the employer against which the incentive payments may be claimed as a credit.
Rhode Island
1994 R.I. Pub. Laws, Chap. 262 -- Requires that child care facilities used by employers that receive a tax credit for providing or paying for employee child care services accept state-subsidized children.
1992 R.I. Pub. Laws, Chap. 162 -- Extends the day care employer tax credit to sole proprietorships.
1988 R.I. Pub. Laws, Chap. 602, Sec. 1 -- Provides a 30 percent tax credit for small businesses and partnerships that pay for or provide child care services for their employees.
1987 R.I. Pub. Laws, Chap. 477 -- Creates a 30 percent tax credit for a taxpayer employer that pays for or provides licensed child care services to its employees, or to the employees of its commercial tenants, or that provides real property or dedicates rental space for child care services.
South Carolina
1995 S.C. Acts, Act 40 -- Includes corporate donations to nonprofit agencies as a qualifying expenditure for the child care credit.
1988 S.C. Acts, Act 658, Sec. 43 --Provides a 50 percent credit against corporate tax liability for capital expenditures, not to exceed $100,000, for establishing child care services for employees and the cost of subsidizing employee child care expenses, not to exceed $3,000 per employee.
Texas
1999 Tex. Gen. Laws, Chap. 394, Sec. 13 - Establishes an employer tax credit of up to $50,000 or 50 percent of costs for operating, constructing, renovating or purchasing child care from a child care center or registered family child care home. Requires a biennial report to the legislature on the implementation and fiscal impact of this credit.
Updated by the National Conference of State Legislatures' Child Care Project, February 2000.
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