Child Care Tax Credit Resource Guide - Women's Foundation of Alabama

This page is intended to provide helpful resources as you navigate and determine if the child care tax credit applies to you or your business. Explore the resources and information below.

The Alabama Child Care Tax Credit law is a comprehensive framework for incentivizing investments in child care infrastructure and services through tax credits and grants. This law was passed in the 2024 Regular Session of the Alabama legislature on May 7, 2024, and signed into law by Governor Kay Ivey on May 9, 2024 as part of a broader package of workforce initiatives.

The law aims to create a robust system of financial incentives to support the expansion, improvement, and operation of child care facilities in Alabama, particularly targeting underserved areas and working families. Through a combination of tax credits and grants, it seeks to enhance child care accessibility and quality, thereby promoting workforce participation and the overall welfare of the community.

Child Care Tax Credit reservation system is set to open on March 1, 2025

The Department of Revenue has posted detailed instructions on the qualifying expenses and how to make the reservation on their website for both credits (links below).

Facility credit: https://www.revenue.alabama.gov/tax-incentives/childcare-facility-tax-credit/

Employer credit: https://www.revenue.alabama.gov/tax-incentives/employer-tax-credit/

If you have questions regarding specific circumstances, reach out to the Department of Revenue via their dedicated email: incentives@revenue.alabama.gov, they are happy to assist.

Childcare Tax Credit Webinars

PAST RECORDINGS

RESOURCES FROM THE BUSINESS CHILD CARE TAX CREDIT WEBINAR:

Below you will find the link to the webinar recording and additional resources to help you better understand the tax credit and related materials:

Link to Rules
Link to FAQs
Link to Bill
Link to IRS
Recording of Webinar
- Passcode: G0+X0Z8f

Additionally, click here to view or download a copy of the full presentation by Susan Kennedy.

In 2022, nearly 85,000 hardworking Alabama families needed access to child care but had no quality options in the communities where they live. This represents 40% of children under age 6 who may need childcare but whose families cannot reasonably access it.

OVERVIEW

BACKGROUND ON THE TAX CREDITS

The 2024 Child Care Tax Credit law is a comprehensive framework for incentivizing investments in child care infrastructure and services through tax credits and grants.

Overall, the law aims to create a robust system of financial incentives to support the expansion, improvement, and operation of child care facilities in Alabama, particularly targeting underserved areas and working families. Through a combination of tax credits and grants, it seeks to enhance child care accessibility and quality, thereby promoting workforce participation and the overall welfare of the community.

OVERVIEW

LEGISLATION

Child Care Tax Credit Bill

The new law contains two tax credits: a tax credit for employers to expand access to child care for employees and a tax credit for child care programs (facilities that participate in Alabama Quality Stars that serve children whose care is paid for with a subsidy). The Act also includes a grant program for nonprofit child care programs.

LEGISLATIVE LANGUAGE

RESOURCES AND INFORMATION

Learn More about the Child Care Tax Credit

More Details and Information Below

Department of Human Resources

Department of Revenue - Employer Tax Credit Info

Department of Revenue - Facility Tax Credit Info

"I had never heard of the "Motherhood Penalty" - where women's pay decreases once they become mothers - until I became a mother myself. My penalty came in the form of a difficult decision during the happiest moment of our lives. Due to the increasing costs and decreasing availability of child care, I was forced to decide between keeping a job I love and caring for my child. Thankfully, my support system afforded my family the opportunity to make this choice. Alabama families need more affordable quality options for child care and we need them now."

Emily Cook