COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:4064S.02I Bill No.:SB 742 Subject:Tax Credits; Children and Minors Type:Original Date:January 17, 2024Bill Summary:The proposal authorizes tax credits for child care.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2025FY 2026FY 2027General Revenue
Fund*Up to ($1,678,169)Up to ($70,334,484)Up to ($70,359,239)
Total Estimated Net
Effect on General
RevenueUp to ($1,678,169)Up to ($70,334,484)Up to ($70,359,239)
*Oversight notes the above cost includes up to the maximum cap in tax credits of $20 million per
year PLUS the potential add-on 15% adjustment ($3M) for childcare desert for all three Sections.
Section(s) 135.1310 & 135.1325 "Child Care Contribution Tax Credit Act" and the "Employer-
Provided Child Care Assistance Tax Credit Act", and 135.1350 "Child Care Providers Tax
Credit" effective FY 2025. Additionally, Oversight reflect FTE for DOR, DED and DESE.
Lastly, the totals includes DESE & DOR costs for ITSD creation and annual maintenance of
software and update of various tax credit forms.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 4064S.02I
Bill No. SB 742
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2025FY 2026FY 2027General Revenue
Fund – DED5 FTE5 FTE5 FTE
General Revenue
Fund – DESE4 FTE4 FTE4 FTE
General Revenue –
DOR 3 FTE3 FTE3 FTE
Total Estimated Net
Effect on FTE12 FTE12 FTE12 FTE
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Local Government$0$0$0 L.R. No. 4064S.02I
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FISCAL ANALYSIS
ASSUMPTION
Section 135.1310 Child Care Contribution Tax Credit Act
Officials from the Department of Revenue (DOR) note:
Starting January 1, 2025, a qualified taxpayer would be able to claim a tax credit against their
state tax liability, in the amount of 75% of a qualified contribution to a qualified childcare
provider. The qualifying contribution could be cash, stocks, bonds or securities. To be a
qualified the childcare provider must be licensed under Section 210.221. The minimum amount
of the credit that may be issued in credit is $100 ($175 donation) while the maximum qualifying
amount of the credit is limited to $200,000 ($350,000 donation) annually.
The childcare provider receiving the contribution must be issued a written verification of the
contribution to the taxpayer and file a copy with the Department of Economic Development
(DED). This proposal allows the credit to be recaptured if the contribution is not used for
providing childcare.
This credit is not refundable, cannot be transferred or sold but they can be carried forward up to
six years. The credits are to be distributed on a first-come, first-serve basis with a cumulative $20
million annual cap. This proposal is scheduled to sunset on December 31, 2029.
This proposal allows that if the cumulative $20 million cap is authorized in a single year, then
the credit can be increased by 15%. However, the increased amount is reserved for childcare
providers in a childcare desert. It should be noted that the cap resets to $20 million each year.
This proposal does establish a provision in Section 135.1310.7, that should a tax-exempt
organization as defined by the IRS qualify to receive the credit, they would be able to have the
credit refunded to them without having a state tax liability. This allows DOR to establish a
procedure should such an organization qualify for the credit.
This provision says the credit is to begin with tax years beginning on or after January 1, 2025.
This would impact the Department starting when the tax returns are filed in January 2026.
Fiscal YearLoss to General Revenue2025$02026(Could exceed $20,000,000)2027(Could exceed $20,000,000)
This proposal creates a new tax credit program that will require a new line being added to the
Form MO-TC ($7,138), updates to our website and changes to our individual income tax
computer system ($1,785). These changes are estimated to cost $8,923. DOR’s existing tax L.R. No. 4064S.02I
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credit staff is no longer able to take on any additional tax credits without additional resources.
Due to the intensive knowledge of credits that is needed, DOR is not able to use temporary staff
to help with processing these returns. This proposal would require at least 1 FTE Associate
Customer Service Rep at a salary of $35,880.
Oversight notes the officials from the DOR assume the proposal will have a direct fiscal impact
on their organization. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect cost to the general revenue for 1 FTE at $35,880 (with applicable E&E)
annually in the fiscal note. Additionally, Oversight will reflect DOR’s cost for updates to form
and computer system changes in amount of $8,923 FY 2025.
Officials from the Department of Economic Development (DED) note:
RSMo. 135.1310. creates the "Child Care Contribution Tax Credit Act". Administered by the
Department of Economic Development.
Child Care Desert - A census tract with poverty rate at least 20% or a median family income of
less than 80% statewide average and at least 500 people or 33% of the population are located at
least 1/2 mile away from a child care provider in urbanized areas or at least 10 miles away in
rural areas.
Tax years beginning on or after 1/1/2025. Tax credit for contribution program. 75% tax credits.
Minimum amount of any tax credit issued cannot be less than $100 and cannot exceed $200K per
tax year. Credits are not transferable, sellable or refundable. 6-year carry forward period. Tax
credits approved first-come-first-served.
Program cap: $20M per CY. If the full amount is authorized in a CY, the cap for the next CY
will be increased by 15%. That increased amount must be used for child care providers located in
a child care desert. The DED Director must publish the new amount. Contribution verifications
must be turned into DED with 60 days of the contribution date. Donations must be used for child
care for youth age 12 and younger, including by acquiring or improving child care facilities,
equipment, or services, or improving staff salaries, staff training, or the quality of child care.
The department may promulgate rules. This program will sunset on 12/31/2030, unless
reauthorized by the general assembly.
Officials from the Office of Administration – Budget & Planning (B&P) note:
This section would create a tax credit for donations made to eligible childcare providers. The tax
credits would begin for tax year 2025 and be equal to 75% of a qualifying donation. B&P notes
that this provision may impact revenues beginning in FY26, when tax year 2025 annual income
tax returns are filed.
A taxpayer may receive a tax credit of $100 ($175 donation) to $200,000 ($350,000 donation).
The tax credits are non-refundable, unless a qualifying contributor is a 501(c)(3) non-profit. The L.R. No. 4064S.02I
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tax credits may not be sold, transferred, or otherwise conveyed. The tax credits may be carried
forward for up to six years.
Per subdivision 135.1310.8(1), no more than $20 million in tax credits may be authorized per
year. However, per subdivision 135.1310.8(2) if the full $20 million is authorized, then an
addition 15% ($3 million) may be authorized. The additional $3 million may only be used for
contributions made to childcare facilities located within a childcare desert. Therefore, B&P
estimates that this provision may reduce TSR and GR by up to $23 million annually beginning in
FY26.
Oversight notes that for informational purposes the Office of Childhood (DESE), in response to
the similar proposal HB 870 (1993.01) 2023, provided Oversight with six years of statistic on
licensed childcare facilities in Missouri as follows:
Year
Licensed Childcare Provider –
Sum
2017 1,6762018 1,5942019 1,4882020 1,1912021 1,324
Reported as of 11/20221,176
Oversight notes that Section 135.1310, the "Child Care Contribution Tax Credit Act" , allows
taxpayers (corporations, charitable organizations which are exempt from federal income tax, and
whose Missouri unrelated business taxable income, if any, would be subject to the state income
tax, and individuals or partnerships subject to the state income tax) to claim tax credit against
state tax liability for the tax year in which a verified contribution was made.
Oversight notes that only contributions directed to child care providers and intermediaries (a
nonprofit organization that is, or agrees to become, subject to the jurisdiction of this state for the
purposes of the administration and enforcement of this section) are able to receive tax credit.
Oversight notes the taxpayer is allowed to claim credit against the taxpayer's state tax liability
for the tax year in which a verified contribution was made in an amount equal to up to seventy-
five percent of the verified contribution to a childcare provider.
Oversight notes that under this section the minimum amount of any tax credit issued shall not be
less than one hundred dollars, and shall not exceed two hundred thousand dollars per tax year.
Oversight notes that any childcare facility receiving funds from taxpayer must provide the
taxpayer with contribution verification. In any case where such a facility fails to do so the facility
must provide the taxpayer with refund of his or her contribution. L.R. No. 4064S.02I
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Oversight notes that the cumulative amount of tax credits authorized pursuant to this section
shall not exceed twenty million dollars for each calendar year. Additionally, this section allows
for additional 15% ($ 3 million add-on) in tax credits to be issued specifically to childcare
facilities located in childcare deserts in Missouri. Therefore, Oversight will note the overall
potential impact under the Section 135.1310 could potentially reach Up to $23 million annually
beginning in FY 2026.
Section 135.1325 Employer Provided Child Care Assistance Tax Credit
Officials from the Department of Revenue (DOR) note:
Starting January 1, 2025, a qualified taxpayer would be able to claim a tax credit in the amount
of 30% of a qualified childcare expenditures paid or incurred with respect to a childcare facility.
This proposal identifies what is a qualifying expenditure and facility. The maximum amount of
credits that can be issued to any taxpayer is $200,000 annually.
This credit is not refundable, cannot be transferred or sold but they can be carried forward up to
five years and carried back one year. The credits are to be distributed on a first-come, first-serve
basis with a cumulative $20 million annual cap. This proposal is scheduled to sunset on
December 31, 2029.
This proposal allows that if the cumulative $20 million cap is authorized in a single year, then
the credit can be increased by 15%. However, the increased amount is reserved for childcare
providers in a childcare desert. It should be noted that the cap resets to $20 million each year.
This proposal does establish a provision in Section 135.1325.6, that should a tax-exempt
organization as defined by the IRS qualify to receive the credit, they would be able to have the
credit refunded to them without having a state tax liability. This allows DOR to establish a
procedure should such an organization qualify for the credit.
This provision says the credit is to begin with tax years beginning on or after January 1, 2025.
This would impact the Department starting when the tax returns are filed in January 2026.
Fiscal YearLoss to General Revenue2025$02026(Could exceed $20,000,000)2027(Could exceed $20,000,000)
This proposal creates a new tax credit programs that will require a new line being added to the
Form MO-TC ($7,138), updates to our website and changes to our individual income tax
computer system ($1,785). These changes are estimated to cost $8,923. DOR’s existing tax
credit staff is no longer able to take on any additional tax credits without additional resources.
Due to the intensive knowledge of credits that is needed DOR is not able to use temporary staff L.R. No. 4064S.02I
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to help with processing these returns. This proposal would require at least 1 FTE Associate
Customer Service Rep at a salary of $35,880.
Oversight notes the officials from the DOR assume the proposal will have a direct fiscal impact
on their organization. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect cost to the general revenue for 1 FTE at $35,880 (with applicable E&E)
annually in the fiscal note. Additionally, Oversight will reflect DOR’s cost for updates to form
and computer system changes in amount of $8,923 FY 2025.
Officials from the Office of Administration – Budget & Planning (B&P) note:
Section 135.1325 – Employer Provided Child Care Assistance Tax Credit Act
This section would create a tax credit for qualified childcare expenditures, for employers with at
least two employees. The tax credits would begin for tax year 2025 and be equal to 30% of
qualifying expenditures. B&P notes that this provision may impact revenues beginning in FY26,
when tax year 2025 annual income tax returns are filed.
A taxpayer may receive a tax credit of up to $200,000 ($666,667 expenditures). The tax credits
are non-refundable, unless a qualifying taxpayer is a 501(c)(3) non-profit. The tax credits may
not be sold, transferred, or otherwise conveyed. The tax credits may be carried forward for up to
six years.
Per subdivision 135.1325.7(1), no more than $20 million in tax credits may be authorized per
year. However, per subdivision 135.1325.7(2) if the full $20 million is authorized, then an
addition 15% ($3 million) may be authorized. The additional $3 million may only be used for
childcare facility expenditures located within a childcare desert. Therefore, B&P estimates that
this provision may reduce TSR and GR by up to $23 million annually beginning in FY26.
Officials from the Department of Economic Development (DED) note:
135.1325. creates the "Employer Provided Child Care Assistance Tax Credit Act". Administered
by the Department of Economic Development.
Applies to tax years beginning on or after 1/1/2025.
Program cap: $20M per calendar year. If the full amount is authorized in a CY, the cap for the
next CY will be increased by 15%. That increased amount must be used for child care providers
located in a child care desert. The DED Director must publish the new amount. A tax credit for
employers’ eligible child care assistance expenditures. The tax credit is for up to 30% of child
care expenditures, with a total taxable year limit of $200,000 per taxing entity. Credits are not
transferable, sellable or refundable. 6-year carry forward period. Tax credits approved first-
come-first-served.
The department may promulgate rules. L.R. No. 4064S.02I
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This program will sunset on 12/31/2030, unless reauthorized by the general assembly.
DED will need to hire 5.0 FTE to administer the two DED programs included in the act. The two
DED administered tax credit programs will likely reduce annual TSR by $20M each ($40M
total). With the FY2024 budget, 5.0 FTE for this program was appropriated; therefore, that cost
is not reflected here because the appropriation has been approved.
Oversight notes the DED officials assume need to hire 5.0 FTE (Senior Economic Development
Specialist at $74,664 +E&E and fringe benefits) to administer the Section(s) 135.1310 and
135.1325. Officials from the DED stated that they received appropriation approval for the 5
FTE’s in 2024; however, for purpose of the fiscal note, Oversight will reflect DED’s FTE cost in
FY 2026, and FY 2027, in the fiscal note.
Oversight notes that Section 135.1325 "Employer Provided Child Care Assistance Tax Credit
Act" allows, after January 1, 2025, for a taxpayer (with two or more employees) to claim a tax
credit in an amount equal to thirty percent of the qualified childcare expenditures paid or
incurred with respect to a child care facility.
Oversight notes the acceptable expenditures are defined as follow:
a) To acquire, construct, rehabilitate, or expand property that will be, or is, used as part of a
child care facility that is either operated by the taxpayer or contracted with by the
taxpayer and which does not constitute part of the principal residence of the taxpayer or
any employee of the taxpayer; or
b) For the operating costs of a child care facility of the taxpayer, including costs relating to
the training of child care employees, scholarship programs, and for compensation to child
care employees; or
c) Or under a contract with a child care facility to provide child care services to employees
of the taxpayer; or
d) As an employer matching contribution, but only to the extent such employer matching
contribution is restricted by the taxpayer solely for the taxpayer's employee to obtain
child care services at a child care facility and is used for that purpose during the tax year
Oversight notes the qualified expenditure includes to acquire, construct, rehabilitate, or expand
property that will be, or is, used as part of a childcare facility that is either operated by the
taxpayer, or contracted with by the taxpayer, and which does not constitute part of the principal
residence of the taxpayer or any employee of the taxpayer. L.R. No. 4064S.02I
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Section 135.1350 Child Care Providers Tax Credit
Officials from the Department of Revenue (DOR) note:
Starting January 1, 2025, a qualified childcare provider with three or more employees would be
able to claim a tax credit in the amount equal to the child care provider’s eligible employer
withholding tax and may claim another credit in an amount up to 30% of the child care
provider’s capital expenditures. To be a qualified childcare provider the provider must be
licensed under Section 210.221. Capital expenditures must be greater than $1,000 to qualify for
the credit. No childcare provider shall receive more than $200,000 in tax credits annually.
To claim the credit the childcare credit the provide must submit an application to the Department
of Economic Development (DED). If DED approves the application, they will issue the tax
credits.
These two credits are not refundable, cannot be transferred or sold but they can be carried
forward up to six years. The credits are to be distributed on a first-come, first-serve basis with a
shared cumulative $20 million annual cap. This proposal will sunset on December 31, 2029.
This proposal allows that if the cumulative $20 million cap is authorized in a single year, then
the credit can be increased by 15%. However, the increased amount is reserved for childcare
providers in a childcare desert. It should be noted that the cap resets to $20 million each year.
This proposal does establish a provision in Section 135.1310.6, that should a tax-exempt
organization as defined by the IRS qualify to receive the credit, they would be able to have the
credit refunded to them without having a state tax liability. This allows DOR to establish a
procedure should such an organization qualify for the credit.
This provision says the credit is to begin with tax years beginning on or after January 1, 2025.
This could impact the Department starting when the tax returns are filed in January 2026.
Fiscal YearLoss to General Revenue2025$02026(Could exceed $20,000,000)2027(Could exceed $20,000,000)
This proposal creates a new tax credit program that will require a new line being added to the
Form MO-TC ($7,138), updates to our website and changes to our individual income tax
computer system ($1,785). These changes are estimated to cost $8,923. DOR’s existing tax
credit staff is no longer able to take on any additional tax credits without additional resources.
Due to the intensive knowledge of credits that is needed DOR is not able to use temporary staff
to help with processing these returns. This proposal would require at least 1 FTE Associate
Customer Service Rep at a salary of $35,880. L.R. No. 4064S.02I
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January 17, 2024
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Oversight notes the officials from the DOR assume the proposal will have a direct fiscal impact
on their organization. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect cost to the general revenue for 1 FTE at $35,880 (with applicable E&E)
annually in the fiscal note. Additionally, Oversight will reflect DOR’s cost for one-time update
to form and computer system in amount of $8,923 FY 2025.
Officials from the Office of Administration – Budget & Planning (B&P) note:
This section would create two tax credits starting in tax year 2025. For childcare providers with
at least three employees, the provider may claim a tax credit equal to qualified withholdings
and/or a tax credit equal to 30% of capital expenditures. A childcare provider must make at least
$1,000 in capital expenditures to claim the capital expenditures credit. B&P notes that this
provision may impact revenues beginning in FY26, when tax year 2025 annual income tax
returns are filed.
A taxpayer may receive a maximum tax credit of up to $200,000 per year. B&P notes that the
$200,000 per taxpayer limit is for both tax credits. Therefore, a taxpayer may either use
$200,000 in withholding taxes or $1,000 in capital expenditures and any combination in between
to claim the maximum credit.
The tax credits are non-refundable, unless a qualifying taxpayer is a 501(c)(3) non-profit. The tax
credits may not be sold, transferred, or otherwise conveyed. The tax credits may be carried
forward for up to six years.
Per subdivision 135.1350.7(1), no more than $20 million in tax credits may be authorized per
year. However, per subdivision 135.1350.7(2) if the full $20 million is authorized, then an
addition 15% ($3 million) may be authorized. The additional $3 million may only be used for
childcare facility expenditures located within a childcare desert. Therefore, B&P estimates that
this provision may reduce TSR and GR by up to $23 million annually beginning in FY26.
Officials from the Department of Economic Development (DED) state section 135.1350
creates the "Child Care Providers Tax Credit Act" which will be administered by the Department
of Elementary and Secondary Education.
Officials from the Department of Elementary and Secondary Education (DESE) note:
This tax credit is designed to support childcare providers with a tax credit towards eligible
employer withholding tax and capital expenditure investments. DESE assumes a new tax credit
section would be required to administer this program. The team: one coordinator, one
administrative support assistant and two program specialists, would be responsible for approval
issuance, and monitoring of the credits for approximately 2,500 licensed childcare providers in
the state. The FTE and ongoing costs were included in the FY 2024 budget. One-time costs have
been reduced in the FY 2025 budget request. These one-time costs have not and will not be used L.R. No. 4064S.02I
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in FY 2024 as the legislation did not pass nor have the FTE been filled. If the language passes
these costs will be needed to set up the new section and process the tax credits.
DESE assumes the administration of this new credit would require the development and
programming of a new system to track the tax credit applications, approvals and monitoring data.
DESE estimates a cost of $500,000 for the development and initial programming with ongoing
annual costs of $50,000.
Oversight notes all childcare providers claiming the tax credit must submit an application for the
tax credit for preliminary approval to DESE.
Oversight notes this Section states that DESE may promulgate rules and adopt statements of
policy, procedures, forms and guidelines to implement and administer the provisions of this
section.
Oversight notes the DESE states it will need 1 Program Coordinator ($68,808), 1 Administrative
Support Assistant ($38,184), and 2 Program Specialist ($59,120) annually in order to implement
and comply with the required provisions under this Section.
Oversight notes officials from the DESE state the FTE and ongoing costs were included in the
FY 2024 budget; however, the one-time ITSD costs have been reduced in the FY 2025 budget
request. Therefore, Oversight will note the DESE projected one time cost for software
development and ongoing ITSD maintenance cost, as well as the FTE costs in the fiscal note
beginning FY 2025.
Responses regarding the proposed legislation as a whole
Officials from the Department of Commerce and Insurance (DCI) state a potential unknown
decrease of premium tax revenues (up to the tax credit limit established in the bill) in FY2026
and FY2027 as a result of the creation of the Child Care Contribution Tax Credit Act and
Employer Provided Child Care Assistance Tax Credit Act. Premium tax revenue is split 50/50
between General Revenue and County Foreign Insurance Fund except for domestic Stock
Property and Casualty Companies who pay premium tax to the County Stock Fund. The County
Foreign Insurance Fund is later distributed to school districts throughout the state. County Stock
Funds are later distributed to the school district and county treasurer of the county in which the
principal office of the insurer is located. It is unknown how each of these funds may be impacted
by tax credits each year and which insurers will qualify for the new tax credit.
The department will require minimal contract computer programming to add this new tax credit
to the premium tax database and can do so under existing appropriation. However, should
multiple bills pass that would require additional updates to the premium tax database, the
department may need to request more expense and equipment appropriation through the budget
process. L.R. No. 4064S.02I
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Oversight notes the Missouri Department of Commerce and Insurance assumes the contract
computer programming can be absorbed with existing resources. Oversight does not have any
information to the contrary. However, should multiple bills pass, the Missouri Department of
Commerce and Insurance may seek additional equipment and expense appropriation through the
appropriation process.
Additionally, DCI assumes the fiscal note does not reflect the possibility that some of the tax
credits could be utilized by insurance companies against insurance premium taxes. If this occurs,
the loss in tax revenue would be split between the General Revenue Fund and the County
Foreign Insurance Fund, which ultimately goes to local school districts.
Officials from the Oversight Division
Report pursuant to Section 23.253 RSMo; however, Oversight can absorb the cost with the
current budget authority.
Rule Promulgation
Officials from the Joint Committee on Administrative Rules assume this proposal is not
anticipated to cause a fiscal impact beyond its current appropriation.
Officials from the Office of the Secretary of State (SOS) note many bills considered by the
General Assembly include provisions allowing or requiring agencies to submit rules and
regulations to implement the act. The SOS is provided with core funding to handle a certain
amount of normal activity resulting from each year's legislative session. The fiscal impact for
this fiscal note to the SOS for Administrative Rules is less than $5,000. The SOS recognizes that
this is a small amount and does not expect that additional funding would be required to meet
these costs. However, the SOS also recognizes that many such bills may be passed by the
General Assembly in a given year and that collectively the costs may be in excess of what the
office can sustain with its core budget. Therefore, the SOS reserves the right to request funding
for the cost of supporting administrative rules requirements should the need arise based on a
review of the finally approved bills signed by the governor.
FISCAL IMPACT – State GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027GENERAL REVENUECost – Section 135.1310 "Child Care
Contribution Tax Credit Act" (p.10)$0
Up to
($23,000,000)
Up to
($23,000,000)
Cost – Section 135.1325 "Employer
Provided Child Care Assistance Tax
Credit Act" (p.11)$0
Up to
($23,000,000)
Up to
($23,000,000) L.R. No. 4064S.02I
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FISCAL IMPACT – State GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027Costs – DOR FTE Section(s) 135.1310
135.1325, & 135.1350 (p.8)
Personnel Service($89,700)($109,793)($111,989) Fringe Benefits($71,688)($86,810)($87,612) Expense & Equipment($39,933)($1,711)($1,745) Other Cost – ITSD Form updates
(p.9)($26,769)$0$0
Total Costs – DOR ($228,090)($198,314)($201,346)FTE Change3 FTE3 FTE3 FTECosts – DED Section(s) 135.1310 &
135.1325 (p.11)Up to…Up to…Up to…
Personnel Service($323,668)($396,170)($404,093) Fringe Benefits($186,018)($227,685)($232,239) Expense & Equipment($63,348)($23,171)($23,635)Total Costs – DED ($573,034)($647,026)($659,967)FTE Change5 FTE5 FTE5 FTECost – Section 135.1350 "Child Care
Providers Tax Credit Act." (p.10)$0
Up to
($23,000,000)
Up to
($23,000,000)
Costs – DESE Section(s) 135.1350
(p.11)Up to…Up to…Up to…
Personnel Service($195,970)($239,867)($244,665) Fringe Benefits($125,266)($153,325)($156,391) Expense & Equipment($55,809)($45,951)($46,870)Total Costs – DESE ($377,045)($439,144)($447,926)FTE Change4 FTE4 FTE4 FTECost – DESE – ITSD New Database
and ongoing maintenance (p.11)($500,000)($50,000)($50,000)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
Up to
($1,678,169)
Up to
($70,334,484)
Up to
($70,359,239)
Estimated Net FTE Change on General
Revenue12 FTE12 FTE12 FTE L.R. No. 4064S.02I
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FISCAL IMPACT – Local GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027$0$0$0
FISCAL IMPACT – Small Business
The proposal could have a direct fiscal impact on small business child care facilities.
FISCAL DESCRIPTION
This act establishes provisions relating to tax credits for child care.
CHILD CARE CONTRIBUTION TAX CREDIT
This act establishes the "Child Care Contribution Tax Credit Act".
For all tax years beginning on or after January 1, 2025, this act authorizes a tax credit in an
amount equal to 75% of the taxpayer's contribution to a child care provider or intermediary, as
such terms are defined in the act. A child care provider or intermediary shall file a contribution
verification with the Department of Economic Development within sixty days of receiving a
contribution, and shall issue a copy of such verification to the taxpayer. A failure to issue a
contribution verification to a taxpayer shall entitle the taxpayer to a refund of the contribution.
Contributions made to intermediaries shall be distributed in full to one or more child care
providers within two years of the intermediary receiving such contribution.
Contributions made under the act shall be used directly by a child care provider to promote child
care for children 12 years of age and younger, shall not be made to a child care provider in which
the taxpayer has a direct financial interest, and shall not be made in exchange for care of a child
or children unless the contribution is made by an employer purchasing child care for the children
of the employer's employees. A child care provider or intermediary that uses a contribution for
an ineligible purpose shall repay to the Department the value of the tax credit used for such
ineligible purpose.
Tax credits authorized by the act shall not be refundable or transferable, but may be carried
forward for up to six tax years. Notwithstanding this provision, taxpayers that are exempt for
federal tax purposes shall be eligible for a refund of any tax credits received under this act, as
described in the act.
The maximum amount of tax credits that shall be authorized in a calendar year shall not exceed
$20 million. If the maximum amount of tax credits is authorized in a calendar year, the
maximum amount of tax credits that may be authorized in subsequent years shall be increased by L.R. No. 4064S.02I
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15%, provided that all such increases in the allowable amount of tax credits shall be reserved for
contributions made to child care providers located in a child care desert, as such term is defined
in the act.
This provision shall sunset on December 31, 2030, unless reauthorized by the General Assembly.
(Section 135.1310)
EMPLOYER PROVIDED CHILD CARE ASSISTANCE TAX CREDIT
This act establishes the "Employer-Provided Child Care Assistance Tax Credit Act".
For all tax years beginning on or after January 1, 2025, this act authorizes a tax credit in an
amount equal to 30% of qualified child care expenditures, as defined in the act, paid or incurred
by an employer with two or more employees providing child care for its employees. The amount
of the tax credit authorized under this act shall not exceed $200,000 per taxpayer per tax year. A
facility shall not be considered a child care facility for the purposes of the act unless enrollment
in the facility is open to the dependents of the taxpayer during the tax year, provided that the
dependents fall within the age range ordinarily cared for by, and only require a level of care
ordinarily provided by, such facility.
Tax credits authorized by the act shall not be refundable or transferable, but may be carried
forward for up to six tax years. Notwithstanding this provision, taxpayers that are exempt for
federal tax purposes shall be eligible for a refund of any tax credits received under this act, as
described in the act.
The maximum amount of tax credits that shall be authorized in a calendar year shall not exceed
$20 million. If the maximum amount of tax credits is authorized in a calendar year, the
maximum amount of tax credits that may be authorized in subsequent years shall be increased by
15%, provided that all such increases in the allowable amount of tax credits shall be reserved for
qualified child care expenditures for child care facilities located in a child care desert, as such
term is defined in the act.
Tax credits authorized by this act shall be subject to recapture, as described in the act.
This provision shall sunset on December 31, 2030, unless reauthorized by the General Assembly.
(Section 135.1325)
CHILD CARE PROVIDERS TAX CREDIT
This act establishes the "Child Care Providers Tax Credit Act".
For all tax years beginning on or after January 1, 2025, this act authorizes child care providers
with three or more employees to claim a tax credit in an amount equal to the child care provider's
eligible employer withholding tax, as defined in the act, and may also claim a tax credit in an L.R. No. 4064S.02I
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amount up to 30% of the child care provider's capital expenditures, as defined in the act,
provided that such capital expenditures are not less than $1,000. The amount of the tax credit
authorized under this act shall not exceed $200,000 per child care provider per tax year.
A child care provider shall submit to the Department of Elementary and Secondary Education an
application for the tax credit on a form to be provided by the Department. The child care
provider shall provide proof of any capital expenditures for which the provider is claiming a tax
credit.
The maximum amount of tax credits that shall be authorized in a calendar year shall not exceed
$20 million. If the maximum amount of tax credits is authorized in a calendar year, the
maximum amount of tax credits that may be authorized in subsequent years shall be increased by
15%, provided that all such increases in the allowable amount of tax credits shall be reserved for
child care providers located in a child care desert, as such term is defined in the act.
This provision shall sunset on December 31, 2030, unless reauthorized by the General Assembly.
(Section 135.1350)
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Elementary and Secondary Education
Department of Economic Development
Department of Revenue
Office of Administration – Budget & Planning
Office of the Secretary of State
Joint Committee on Administrative Rules
Oversight Division
Department of Commerce and Insurance
Julie MorffRoss StropeDirectorAssistant DirectorJanuary 17, 2024January 17, 2024