Could childcare benefits work for your business?

The opportunity

Most companies that offer anything around child care offer a Dependent Care FSA and call it a day. A DCFSA caps out at a few thousand dollars of tax savings per employee, which may not even cover a month of care in New York. For employees who spend five or six figures a year on child care, the gap between what their employer offers and what they actually need is enormous.

Since January 2026, the federal credit covers 40% of qualified childcare expenditures, or 50% for eligible small businesses. 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. The actual benefit depends on your employer, expenditures, and arrangement.

This is not a loophole. The credits are explicitly in the tax code. They are simply underused, because the structuring is genuinely complicated and the interaction across federal and state rules is not widely understood. Outside tax counsel has formally reviewed the program design requirements (fair access and contract terms); a summary of that review is available on request.

A note on timing: The money "comes back" on a short time frame, not when you file your return much later. Businesses pay quarterly tax estimates throughout the year. Your accountant will reduce your estimates to reflect the credit as it accrues, so the net cash outlay is small and typically recovered within 1 to 2 months. We map your exact schedule with your finance team before you commit.

Who this fits

The structure works best for employers who:

• Have employees with young children.
• Are profitable, or expect to be over the next few years (you need tax liability to use the federal credits against).
• Have employees in New York. (The math gets stronger here. We can also help employers outside New York, with a more federal-focused structure.)

If you don't fit cleanly, talk to us anyway. The interesting cases are usually the ones nobody recognized as opportunities.

What we do for you

• Opportunity assessment. We look at your headcount, geography, ownership structure, and current benefits to figure out whether this makes sense and what it would look like in practice. If the answer is no, we say so.
• Program design. We design the arrangement around your specific situation, including the providers involved, how it interacts with your existing benefits, and how to satisfy the legal requirements that govern who can participate and how. If your employees have relationships with existing care providers they like, we are often able to add them to our network.
• Documentation and compliance. We prepare the plan documents, structure the contracts with care providers, and build the records that need to exist before any money moves. Your existing tax advisors own the final calculations and sign-off, but we make their jobs as straightforward as possible.
• Ongoing support. Regulations change, your workforce changes, your provider mix changes. We stay engaged so the program keeps working year over year.

We coordinate with your existing benefits providers, CPA, and outside counsel. We do not replace them.

What we do not do

We are not a benefits administrator, a TPA, a child care operator, a law firm, or a CPA firm. We are a specialty advisory shop that knows this corner of the benefits world deeply and works alongside the rest of your team. Pricing is a flat setup engagement plus a small percentage of the tangible benefits your team gets, not a per-employee admin fee.

Important: nothing here is legal, tax, or financial advice. The right answer for any particular employer depends on facts we do not know yet, and on questions only your own qualified advisors can resolve. Loop them in early.