Unlock Up to $600,000 in Childcare Tax Credits

The §45F credit is a federal tax incentive designed to encourage employers to provide childcare benefits to their employees. Under the 2026 OBBBA guidelines, businesses can receive 40-50% of qualified childcare expenses, with annual caps up to $600,000.

The One Big Beautiful Bill Act (OBBBA) significantly enhanced the credit: rates increased from 25% to 40-50%, annual caps rose from $150,000 to $500,000-$600,000, and coverage now includes third-party contracted providers.

A business qualifies as 'small' if its average gross receipts for the preceding three tax years do not exceed $31 million. Small businesses receive the higher 50% credit rate and $600,000 annual cap.

Qualified expenses include: operating costs of on-site childcare facilities, costs to acquire/construct/rehabilitate childcare facilities, and costs for contracted childcare services with third-party providers (new in 2026).

We provide comprehensive support including eligibility assessment, credit calculation, documentation guidance, and filing assistance. Our team stays current with all IRS regulations and the latest OBBBA guidelines to maximize your credit.

The credit is claimed on your annual business tax return. For 2026 tax year benefits, you'll claim them when filing your 2026 return in 2027. However, planning ahead ensures you can maximize qualifying expenses.

If your primary business is childcare, there's a special rule called the 30% test: at least 30% of the children enrolled at your facility must be dependents of your employees for the expenses to qualify. However, if you own a separate non-childcare business, that business may still qualify for the credit when paying for employee childcare at your center or elsewhere.

If you own a childcare center and another business that is not childcare, your non-childcare business may qualify for the §45F credit when providing childcare benefits to its employees—even if the childcare is provided at your own center. The 30% rule only applies when childcare is the taxpayer's primary business. Contact us to discuss your specific situation.

Generally, no. The §45F credit is designed for tax-paying entities. Nonprofits and government-funded organizations typically don't have federal tax liability to offset, so they cannot utilize this credit. However, their employees who work elsewhere may encourage their employers to take advantage of it.

Yes, multiple employers can share a childcare facility. For example, several dental practices in the same area could jointly establish or contract with a childcare center. Each employer would claim credits based on their individual qualified expenses. This arrangement can make on-site or near-site childcare more feasible for smaller businesses. Contact us to explore partnership structures.