Tax & Incentives

Taxes and Incentives to Help Your Business Implement a Child Care Program

Implementing a child care benefits program not only supports employees but also offers significant financial advantages for businesses, particularly through federal and state tax incentives. In New York State, employers can benefit from a refundable tax credit equal to 50% of qualified child care facility expenditures and 20% of child care resource and referral expenditures, up to a maximum of $500,000 per tax year. This means that for every dollar spent on eligible child care initiatives, businesses can receive substantial tax relief, effectively reducing the net cost of these programs. The expenses associated with establishing a child care benefits program can vary widely based on the scope and nature of the offerings. For instance, some employers have implemented child care subsidies or partnerships with local providers at relatively low costs, sometimes as little as $0.78 per employee per month. On the other hand, creating on-site child care facilities can involve higher initial investments, including construction and staffing expenses. However, studies have shown that such investments can yield returns of up to 425% of their cost, highlighting the potential for these programs to be both beneficial and cost-effective. These pages outline some of the federal and New York State taxes and incentives that may be available to you, depending on the type of child care benefits program you implement and the employees you are serving.

Future Employer Resource:

NY Employer-Supported Child Care Pilot

To better address affordability for families that are ineligible for the CCAP, the Governor proposed and the state legislature approved a new pilot initiative to spur employer-led child care support for employees. For employees with earnings between 85% and 100% of state median income (SMI), the new initiative will split the cost of care between the state, employers, and employees. Employers will contribute a third of the cost of care for families and the State will match it, reducing out-of-pocket costs for these families and generating millions of dollars in new financial support for child care. More information will be available once the OCFS goes live with the project.

Incentives Resources

11. Committee for Economic Development, The Conference Board. (n.d.). Child Care in State Economics—2019 Update. https://education.ced.org/childcareimpact

Child care benefits are a recruitment and retention tool for employers

88%
Women with children under age 6 said that having work flexibility, predictable hours, or child care support would make them more likely to choose an employer.
Source: Moms First, Marshall Plan for Moms, The Business Care for Child Care, 2022.
83%
Mothers with children under age 6 said that child care benefits would be a very important or somewhat important factor in deciding whether to stay at their current employer or switch employers.
Source: Moms First, Marshall Plan for Moms, The Business Care for Child Care, 2022.
86%
Of 91,800 New York parents working part-time due to child care problems in 2022, 86% were women.
Source: NY Department of Labor, 2023 Child Care in New York State