A newly valuable credit for your clients

What's happening

Employer-provided child care credits (IRC 45F) used to be a footnote: small numbers, narrow eligibility, almost nobody claiming them. That changed when the OBBBA significantly expanded Section 45F to give credits for 40% of qualified expenditures, 50% for eligible small businesses, capped at $500K/$600K (see: the IRS's page, and the Bipartisan Policy Center's 2026 guide). New York (see: the state's page) and a few other states have layered state-level credits on top. Combined federal and state credits can reach 80% or more in some states, subject to eligibility, state rules, and caps. See the state credit guide.

Federal credits cover 40–50% of qualified childcare expenditures; combined federal and state credits can reach 80% or more in some states, subject to eligibility and caps. Qualifying arrangements can use offsite care providers, so your clients do not need to enter the childcare business. Care Assembly helps employers and their advisors evaluate client fit and implementation requirements.

A timing note for your client conversations: clients who make quarterly payments using the current-year method recover the credit through reduced installments as the year goes on, not as a refund the following spring. That can make the effective recovery cadence much faster than annual.

Why coordinate with a specialty shop

If your clients want to set up a 401(k), a hundred providers can offer them a turnkey solution. Not so here. The mechanics are straightforward in principle and finicky in practice. The arrangements typically involve:

• A written contract between the employer (or an intermediary) and one or more licensed child care providers, satisfying specific structural requirements.
• A written child care plan that satisfies nondiscrimination requirements.
• Coordination with related provisions covering employee-side exclusions, so the same dollar is not getting double-counted in a way that creates a problem on either side.
• State-level overlay where applicable, with conformity questions that vary by jurisdiction.
• Ongoing documentation and payment support, which small HR departments often don't have the capacity to handle in-house.

Doing this once for a single employer is a challenging project. Doing it ten times is a practice. We have built the templates, contracts, and provider relationships that make it run cleanly, and we coordinate with your firm rather than competing with it.

How we work with accounting and tax advisory firms

• Referral. You send us clients who stand to benefit. We do the design, plan documents, and provider contracting. You retain the tax engagement and prepare the relevant returns and forms.
• Co-servicing. We work jointly through the structuring phase, with your firm in the lead on the client relationship and on tax positions taken on the return. We give you documentation and research; you own all tax positions.
• Background support. If a client has already designed something internally, we can review the structure and documentation against current best practice without taking the relationship.

Where your firm's role for the client permits a referral fee, we can offer one, with the written disclosure your rules require. Where it doesn't, since we don't prepare returns or hold tax engagements, we can refer clients to a firm like yours for everything downstream.

What we are not

We are not a CPA or law firm. We do not give individual tax advice. We do not sign returns or take positions on your client's tax filings. We do the design, the contractual work, the provider network, and the compliance documentation. The tax engagement stays with you.

Important: this page is informational, not advice for any specific client situation. Specific facts, entity structure, and jurisdiction drive the answer, and the rules are still being clarified by Treasury and other authorities. We will tell you in plain English what we are confident about and what we are not.