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% tax credit for contracting with Child Care Resource and Referral agencies, (in South Dakota, contact an Early Childhood Enrichment office), to help families find child care that works within their budget. Or, call the SD Child Care Helpline at 2-1-1!