New Child Care Tax Credit for Workforce Begins in 2026
The state of Louisiana is set to introduce a new tax credit aimed at enhancing child care access for working families. This initiative, called the Workforce Child Care Tax Credit, will begin its implementation in 2026, with businesses being able to claim it from 2027. The legislation marks a significant shift in the state’s approach to child care, responding to the needs of both families and employers.
Key Features of the New Workforce Child Care Tax Credit
- Legislation Overview: Enacted through Act 454 during the 2025 Regular Legislative Session, the tax credit doubles the previous incentive’s value.
- Business Eligibility: Available to businesses making qualified investments in child care services.
- Increased Limits: Maximum claims for child care expenses are raised from $50,000 to $100,000 per tax year.
- Expanded Support: Employers can now contribute up to $10,000 per child annually to eligible child care facilities, doubling the previous limit.
- Child Care Slot Reservation: Companies can claim tax credits for reserving child care slots, with an increased cap of $100,000.
- High-Quality Provider Support: Additional tax credits are available for businesses whose employees’ children enroll in top-rated programs.
Economic Implications
The enhancements to the tax credit are designed to address barriers to employment for Louisiana families. Reliable child care is essential for helping parents advance in their careers. Inadequate child care has significant economic implications, costing Louisiana employers approximately $762 million annually. Moreover, when parents miss work due to child care issues, this leads to an estimated $1.3 billion loss to the state’s economy each year.
Impact on Workforce and Families
The aim of the Workforce Child Care Tax Credit is to motivate more employers to invest in child care solutions. By supporting available child care resources, the law seeks to improve workforce participation rates and economic stability for families. Research indicates that stable child care leads to higher workforce participation and enhanced productivity, all while giving children essential early learning opportunities.
Next Steps for Businesses
To benefit from the new tax credit, businesses should prepare to apply early in 2027, as credits will be allocated on a first-come, first-served basis. The total available credit for the current tax year is capped at $1 million but may increase to $5 million in subsequent years based on utilization.
For more detailed information on the Workforce Child Care Tax Credit and its requirements, businesses can refer to the Louisiana Department of Revenue, specifically Workforce Child Care Tax Credits Bulletin #25-029.
