Act No. 2024-303
By Rep. Anthony Daniels, D-Huntsville, and Sen. Garlan Gudger, R-Cullman
Three years of tax credits for employers and childcare centers plus grants for nonprofit childcare providers are now law. The governor and legislative leaders hope to get more parents back to work by encouraging employers to fund childcare and allow providers to accept more children ages five and younger.
Act No. 2024-303 by Rep. Anthony Daniels, D-Huntsville, and Sen. Garlan Gudger, R-Cullman, received final approval in the Senate on May 7. The governor signed it into law May 9. Daniels said the tax credits “will touch the lives of thousands of Alabama families.”
From 2025 through 2027, employers of any size can claim a tax credit of up to $600,000 annually. Employers with 25 or fewer employees can claim 100% and large businesses can claim 75% of expenses. Eligible expenses include construction, renovation or expansion of childcare facilities and funding or helping fund childcare for employees.
Childcare facilities are eligible for up to a $25,000 credit annually for up to $2,000 for each child participating in the Alabama Department of Human Resource’s Child Care Subsidy Program, depending on the quality of the childcare offered.
The program will be capped at $15 million in its first year and increase each year until reaching $20 million in 2027. Each year, 25% of the credits would go to rural areas or small businesses.
The estimated fiscal impact is $82.5 million over the three years.
The credits take effect Jan. 1, 2025. Gudger said the tax credits purposefully don’t take effect until Alabama’s overtime income tax exemption “goes off of the books.” Lawmakers can extend the tax credits after weighing their effectiveness.
The childcare tax credits are a part of the “Working for Alabama” bipartisan workforce development legislative package. Also enacted as part of that package are the Alabama Workforce Pathways Act. renaming of the Alabama Department of Labor to the Alabama Department of Workforce, the Alabama Growth Alliance, creating research and development corridors and the Alabama Workforce Housing Tax Credit.
>> Landmark ‘Working for Alabama’ package signed into law (governor.alabama.gov)
>> Lawmakers approve workforce tax credits (apnews.com)
>> Child care, housing tax credits win final approval (alabamareflector.com)
>> Alabama OKs first-of-its-kind childcare tax credit bill (al.com)
OTHER RELATED NEWS STORIES
- Gudger: Time to invest in child care to keep Alabama working (special to aldailynews.com)
- Alabama leaders unveil extensive seven-bill package designed to expand workforce (aldailynews.com)
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