02-21 10:06 1st Sub. (Buff) H.B. 389
Jason E. Thompson proposes the following substitute bill:
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Child Care Business Tax Credit
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jason E. Thompson
Senate Sponsor:
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LONG TITLE
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General Description:
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This bill enacts an income tax credit for employer-provided child care.
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Highlighted Provisions:
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This bill:
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▸ enacts nonrefundable corporate and individual income tax credits for employer-provided
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child care; and
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▸ makes technical and conforming changes.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides a special effective date.
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This bill provides retrospective operation.
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Utah Code Sections Affected:
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AMENDS:
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59-10-1002.2, as last amended by Laws of Utah 2023, Chapters 460, 462
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ENACTS:
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59-7-627, Utah Code Annotated 1953
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59-10-1048, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 59-7-627 is enacted to read:
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59-7-627 . Nonrefundable tax credits for employer-provided child care.
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(1) As used in this section:
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(a) "Principal residence" means the same as that term is defined in Section 121, Internal
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Revenue Code.
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1st Sub. H.B. 389 1st Sub. (Buff) H.B. 389 02-21 10:06
(b) "Qualified child care expenditure" means the amount paid or incurred Ĥ→ [:]
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[(i)] ←Ĥ for the operating costs of a qualified child care facility of the employer, including
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costs related to training employees, offering scholarship programs, and providing
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increased compensation to employees with higher levels of child care training Ĥ→ [; or] .
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[(ii) under a contract with a qualified child care facility to provide child care services
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Ĥ→ [to the employer's employees.] ←Ĥ
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(c) "Qualified child care facility" means the same as that term is defined in Section 45F,
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Internal Revenue Code, except that the facility is a center based child care as that
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term is defined in Section 26B-2-401 and is located in the state:
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(i) in a county of the first class, as classified in Section 17-50-501, within one mile of
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any boundary of the property on which the employer's office is located;
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(ii) in a county of the second or third class, as classified in Section 17-50-501, within
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two miles of any boundary of the property on which the employer's office is
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located; or
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(iii) in a county of the fourth, fifth, or sixth class, as classified in Section 17-50-501:
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(A) within the boundaries of the municipality in which the employer's office is
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located; or
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(B) if the employer's office is located in an unincorporated portion of the county,
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within the boundaries of the nearest municipality.
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(d) "Qualified construction expenditure" means an amount paid or incurred to acquire,
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construct, rehabilitate, or expand property:
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(i) for a qualified child care facility of the employer; Ĥ→ and ←Ĥ
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(ii) with respect to which the employer is allowed a deduction for depreciation, or
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amortization in lieu of depreciation Ĥ→ [; and] .
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[(iii) that is not part of the principal residence of the employer or an employee of the ] ←Ĥ
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Ĥ→ [employer.] ←Ĥ
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(e) "Qualifying taxpayer" means a taxpayer that:
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(i) is an employer; and
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(ii) qualifies for and claims the federal employer-provided child care tax credit
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described in Section 45F, Internal Revenue Code, for the current taxable year.
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(2)(a) A qualifying taxpayer may claim a nonrefundable tax credit equal to 20% of the
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qualified construction expenditures the qualifying taxpayer incurred during the
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taxable year.
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(b) A qualifying taxpayer may carry forward, to the next five taxable years, the amount
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of the qualifying taxpayer's tax credit described in this Subsection (2) that exceeds
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the qualifying taxpayer's income tax liability for the taxable year.
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(3)(a) A qualifying taxpayer may claim a nonrefundable tax credit equal to 10% of the
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qualified child care expenditures the qualifying taxpayer incurred during the taxable
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year.
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(b) A qualifying taxpayer may not carry forward or carry back the tax credit described in
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this Subsection (3) that exceeds the qualifying taxpayer's income tax liability for the
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taxable year.
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Section 2. Section 59-10-1002.2 is amended to read:
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59-10-1002.2 . Apportionment of tax credits.
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(1) A nonresident individual or a part-year resident individual that claims a tax credit in
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accordance with Section 59-10-1017, 59-10-1018, 59-10-1019, 59-10-1022, 59-10-1023,
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59-10-1024, 59-10-1028, 59-10-1042, 59-10-1043, 59-10-1044, 59-10-1046, [or ]
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59-10-1047, or 59-10-1048 may only claim an apportioned amount of the tax credit
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equal to:
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(a) for a nonresident individual, the product of:
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(i) the state income tax percentage for the nonresident individual; and
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(ii) the amount of the tax credit that the nonresident individual would have been
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allowed to claim but for the apportionment requirements of this section; or
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(b) for a part-year resident individual, the product of:
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(i) the state income tax percentage for the part-year resident individual; and
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(ii) the amount of the tax credit that the part-year resident individual would have been
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allowed to claim but for the apportionment requirements of this section.
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(2) A nonresident estate or trust that claims a tax credit in accordance with Section
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59-10-1017, 59-10-1020, 59-10-1022, 59-10-1024, [or ]59-10-1028, or 59-10-1048 may
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only claim an apportioned amount of the tax credit equal to the product of:
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(a) the state income tax percentage for the nonresident estate or trust; and
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(b) the amount of the tax credit that the nonresident estate or trust would have been
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allowed to claim but for the apportionment requirements of this section.
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Section 3. Section 59-10-1048 is enacted to read:
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59-10-1048 . Nonrefundable tax credits for employer-provider child care.
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(1) As used in this section:
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(a) "Principal residence" means the same as that term is defined in Section 121, Internal
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Revenue Code.
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(b) "Qualified child care expenditure" means the same as that term is defined in Section
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59-7-627.
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(c) "Qualified child care facility" means the same as that term is defined in Section
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59-7-627.
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(d) "Qualified construction expenditure" means the same as that term is defined in
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Section 59-7-627.
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(e) "Qualifying claimant" means a claimant, estate, or trust that:
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(i) is an employer; and
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(ii) qualifies for and claims the federal employer-provided child care tax credit
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described in Section 45F, Internal Revenue Code, for the current taxable year.
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(2)(a) A qualifying claimant may claim a nonrefundable tax credit equal to 20% of the
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qualified construction expenditures the qualifying claimant incurred during the
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taxable year.
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(b) A qualifying claimant may carry forward, to the next five taxable years, the amount
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of the qualifying claimant's tax credit described in this Subsection (2) that exceeds
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the qualifying claimant's income tax liability for the taxable year.
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(3)(a) A qualifying claimant may claim a nonrefundable tax credit equal to 10% of the
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qualified child care expenditures the qualifying claimant incurred during the taxable
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year.
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(b) A qualifying claimant may not carry forward or carry back the tax credit described in
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this Subsection (3) that exceeds the qualifying claimant's income tax liability for the
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taxable year.
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Section 4. Effective Date.
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This bill takes effect on May 7, 2025.
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Section 5. Retrospective operation.
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This bill has retrospective operation for a taxable year beginning on or after January 1,
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2025.
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