Tax Benefits
Tax Benefits to Support Employee Child Care
On Site Child Care
Beginning in 2026, businesses can receive a federal tax credit equal to 40% of expenses for employee child care. The maximum credit allowed per year is capped at $500,000. (Small businesses are allowed 50% of expenses and the cap is $600,000 annually).
Contracting for Child Care
Beginning in 2026, businesses can contract with a child care program to provide child care for their employees or help make it more affordable. Similar to on-site child care, businesses can receive a tax credit of up to 40% of expenses, with an annual cap set at $500,000. (Small businesses are allowed 50% of expenses and the cap is $600,000 annually).
Help Families Find Child Care
Businesses can receive a 10% federal tax credit for contracting with Child Care Resource and Referral agencies to help families find child care that works within their budget. Contact Child Care Aware of Virginia to find out about available services.
Virginia Employer Child Care Tax Credit
Virginia has a state child care facility investment tax credit. Employers are allowed a tax credit of up to 25 percent of all expenditures paid or incurred for planning, site preparation, construction, renovation, or acquisition of facilities for the purpose of establishing a child day-care facility to be used primarily by the children of the employer’s employees. Virginia’s tax credit is under state law § 58.1-439.4
Child Care Search Help
For free, personalized assistance, you can search Child Care Aware of Virginia’s online child care database or contact Child Care Aware of Virginia’s Referral Specialist at 866-KIDS-TLC or kay@vachildcare.com.
Expert staff can help parents identify child care options based on family specific needs.