New Workforce Child Care Tax Credit Begins in 2026

Starting in 2026, Louisiana will introduce the new Workforce Child Care Tax Credit, aimed at enhancing access to quality child care for employees. This initiative comes as part of Act 454, passed during the 2025 Regular Legislative Session, focusing on workforce development and child care solutions.

Overview of the Workforce Child Care Tax Credit

The Workforce Child Care Tax Credit will significantly change how businesses can support their employees’ child care needs. Here are the key features of the new credit:

• Doubling of Credit Value: The maximum allowable expenses for business tax credits will double from $50,000 to $100,000 per tax year.
• Increased Payments for Child Care: Businesses can now contribute up to $10,000 per child per year toward eligible child care, up from $5,000.
• Child Care Slot Reservations: Companies can claim up to $100,000 yearly for purchasing or reserving child care slots at eligible facilities, benefiting employee children.
• Support for High-Quality Providers: The tax credit amount increases for businesses whose employees’ children are enrolled in top-rated child care programs.

Implementation Timeline

Businesses will be eligible to claim the credit on their 2027 tax returns. For the 2026 tax year, the total available tax credit will initially be $1 million, with potential growth to $5 million in the following years based on utilization rates. Applications for credits will be processed on a first-come, first-served basis beginning in 2027, making it crucial for businesses to apply early.

Economic Impact

The new tax credit addresses significant barriers to employment for working families in Louisiana. Research indicates that lack of reliable child care costs employers approximately $762 million each year. Additionally, it contributes to an estimated $1.3 billion economic loss annually due to reduced workforce participation and consumer spending.

Better Louisiana, a proponent of the legislation, emphasizes the need for businesses to invest in child care solutions. Reliable child care not only advances workforce participation and productivity but also enhances early learning opportunities for children.

Conclusion

Act 454 signifies Louisiana’s commitment to creating a family-friendly environment that promotes economic growth. By facilitating better access to child care for working parents, this tax credit aims to transform both employee satisfaction and business efficiency in the state.

Further details about the Workforce Child Care Tax Credits can be found in the Louisiana Department of Revenue’s official publications.