The federal child care credit, explained

The credit at a glance

	Most employers	Eligible small businesses
Credit on qualified child care spending	40%	50%
Annual cap per employer	$500,000	$600,000

An eligible small business has average annual gross receipts of $32 million or less over the prior five years (the 2026 figure), and the caps adjust for inflation after 2026. The credit also covers 10% of spending on child care resource and referral services, and your CPA claims it on IRS Form 8882. You can check all of this on the IRS’s page on the expanded employer child care credit and in the Bipartisan Policy Center’s 2026 guide.

What a program looks like

• You pay licensed providers for your employees’ care. That can be centers or licensed family child care homes, including ones your employees already use. Nobody has to build or run a center, and nannies and informal arrangements don’t count.
• The benefit is offered broadly. The credit can’t favor highly compensated employees, so eligibility is designed across the workforce from the start.
• It offsets federal income tax. That makes it a fit for employers that owe tax now or expect to.
• Smaller employers can pool. Since 2026, payments through an intermediary count, and facilities can be jointly owned.
• State credits can stack. Several states add their own employer credit. See the state credit map.

What we do

We assess whether the credit fits, design the program, contract the providers, and build the documentation your CPA needs to claim it. We work alongside your broker, CPA, and counsel rather than replacing them. More on how we work with employers.

For chambers, coalitions, brokers, and CPAs

If your members or clients are asking about the credit, we’ll run a 30-minute briefing for them or work alongside you on specific employers, and we’re open to referral partnerships. Pick your role in the form above and we’ll set something up. Tax advisors can also get our free briefing on the credit.

More resources

• State-by-state credit map
• EPIC’s Employer Childcare Navigator
• FamTech.org. For the latest on rulemaking, email policy@famtech.org.

Nothing here is legal, tax, or financial advice. Credit amounts depend on each employer’s facts and on questions only your own qualified advisors can resolve. Treasury is expected to issue guidance on intermediary roles, qualified expenses, and documentation. This page reflects publicly available information as of November 2026.