House passes tax credit package to boost childcare

The Missouri House worked quickly to move a tax credit package aimed at addressing the state's childcare crisis. The House this week passed a plan with a vote of 113-39 to provide tax credits to childcare providers, donors to daycare centers, and businesses who help to cover the childcare costs of their employees as a solution to the ongoing workforce crisis while also serving as an economic development tool for the state.

The bill sponsor emphasized the severity of the issue, telling her fellow legislators that there is only one available childcare slot for every three children under the age of 5 in Missouri. With 94% of Missouri counties labeled as childcare deserts, many businesses struggle to find workers due to childcare challenges. The bill sponsor told members of how the rising cost for childcare has become a major factor in the budget of many Missouri families and is often the major factor when deciding whether one parent should stay home and forgo rejoining the workforce.

"Missouri has lost more than $1.3 billion annually as a result of childcare shortages, including $286 million of tax revenue that we could have collected," the bill sponsor said. "This plan serves as an innovative solution to the problem, as business, parents, and government can all work together. Affordable, reliable, safe, childcare is an important infrastructure in our state. We will have a reliable workforce because that workforce will be able to rely on this to have quality, affordable childcare available."

HB 1488 asks the state legislature to approve a tax credit package intended to boost access to childcare options statewide. The bill is broken out into three parts:

Child Care Contribution Tax Credit Act (Effective: Jan 1, 2025, to Dec 31, 2030):

• Taxpayers can claim a 75% tax credit against state liability for childcare contributions.
• Credit range: $100 to $200,000 per year.
• Eligible donations must directly support childcare for children aged 12 or younger.
• Non-refundable tax credits capped at $20 million annually, with a 15% increase for contributions in "childcare deserts."

Employer Provided Child Care Assistance Tax Credit Act (Effective: Jan 1, 2025, to Dec 31, 2030):

• Taxpayers with two or more employees can claim a 30% tax credit for childcare expenditures.
• Maximum credit: $200,000 per taxpayer per year.
• Applicable to corporations, certain charitable organizations, and individuals subject to state income tax.
• Non-refundable tax credits capped at $20 million annually, with a 15% increase for contributions in "childcare deserts."

Child Care Providers Tax Credit Act (Effective: Jan 1, 2025, to Dec 31, 2030):

• Childcare providers with three or more employees can claim a tax credit for withholding tax and up to 30% of capital expenditures.
• No credit for capital expenditures under $1,000.
• Maximum tax credit: $200,000 per provider per year.
• Non-refundable tax credits with excess credits carried back or forward up to five tax years.
• Capped at $20 million annually, with a 15% increase for contributions in "childcare deserts."

The tax credits, estimated to cost up to $70 million, are justified by the potential economic growth and tax revenue they could generate. The bill would be valid for six years, allowing lawmakers to assess its impact.

Jamie Burger is a state representative for District 148 in the Missouri General Assembly where he also serves as the assistant majority floor leader.