Child Care Creation and Expansion Tax Credit

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Contents

Overview

There is a critical shortage of infant and toddler child care that is available and accessible to working parents in New York State. To spur the creation and expansion of child care programs and address this vital need, the Office of Children and Family Services (OCFS) will administer a new tax credit program for businesses that provide additional infant/toddler child care opportunities for their employees. Eligible businesses that create new infant/toddler child care seats or expand existing programs in 2023 and/or 2024 can apply for the tax credit.

Program Highlights

This initiative is designed to incentivize and assist businesses that generate greatly needed infant and toddler child care seats. Businesses with a location in New York subject to tax under Tax Law Article 9-A, 22, or 33 and providing licensed or registered child day care seats for their employees, either directly or through a third party, can apply for the tax credit. The child care seats must be newly created or expanded, and the seats cannot have existed prior to April 1, 2023. Businesses must limit the cost imposed on employees to no more than 40% of the established child care rate.

The new child care tax credit program will be available for two years, and New York State will make $25 million available each year to fund the tax credit. The credit will be allocated based on increased capacity in the infant and/or toddler age groups to each business that demonstrates eligibility until funding is exhausted.

Important Dates and Deadlines

Eligibility

To be eligible for a tax credit under the child care creation and expansion credit, a business entity must:

1. operate a business location in New York State and be a business entity required to file a tax return pursuant to Article 9-A, 22 or 33 of the Tax Law;
2. be a child care program, or contract with such child care program, as defined in this title, that is licensed or registered pursuant to NYS SSL §390;
3. create or expand child care seats in the infant and/or toddler categories, directly or through a third party, for the employees of such business entity on or after April 1, 2023 and before January 1, 2025, with children occupying the seats;
4. be in compliance with any child care licensing laws and regulations related to the entity's business sector or other laws and regulations, as determined by the OCFS commissioner; and
5. not owe past due state taxes or local property taxes, unless the business entity is making payments and complying with an approved binding payment agreement entered into with the taxing authority.

Maximum Tax Credit Allowable

A business entity that meets all requirements may be eligible to claim a credit for the portion of the service year in which the child care program was in operation, equal to the sum of:

1. the product of the number of infant child care seats that have been created or expanded and 20% of the child care rate (in accordance with the 2022 child care market rate survey report published by OCFS) for such infant child care seats, and
2. the product of the number of toddler child care seats that have been created or expanded and 20% of the child care rate (in accordance with the 2022 child care market rate survey report published by OCFS) for such toddler child care seats, provided that such infant and toddler child care seats are occupied.

Please note: Credit shall not be allowed for more than 25 child care seats, and the amount of such credit may be reduced due to allocation of available funds. If a program creates more than 25 child care seats including both infant and toddler seats, credit will be given for the infant seats first (at the higher rate) and then the toddler seats.

Application Requirements

Information on the Creation and Expansion Tax Program:
Word Program Information | PDF Program Information - English
Word Program Information Spanish | PDF Program Information Spanish - Spanish/Español

Programs will apply online via a web-based application process. Applications for the tax credit will be made available online and must be completed and successfully uploaded by January 31, after the end of the service year. As part of the application process, businesses are required to enter:

• business demographics
• contact information for a representative of the employer/business
• child care facility information including the facility ID
• the number of additional infant/toddler seats created at the child care program, and the number of weeks each additional seat was occupied.

The business will be required to review and agree to the attestations listed in Appendix A of the application.

OCFS recommends that applications be submitted at least 10 business days prior to the deadline to ensure that they upload properly and are received by OCFS. OCFS will not review incomplete applications after the due date, all applications must be complete at the time the portal closes.

Upon submission of the application, OCFS will notify the business entity that the application was received and is being evaluated. If the application is deemed complete and all criteria for eligibility have been met, OCFS will notify the applicant and issue a Certificate of Tax Credit to the business entity to accompany its tax filing for the relevant service year (2023 or 2024).

Frequently Asked Questions

Frequently Asked Questions:
Word FAQ | PDF FAQ - English
Word FAQ Spanish | PDF FAQ Spanish - Spanish/Español

Promotional Flyers

Child Care Creation and Expansion Tax Credit Flyer: English Flyer | Spanish/Español Flyer

Resources and Forms

Tax and Finance forms and instructions are available on the Tax and Finance website.

Application Assistance

Questions? Please contact the OCFS Division of Child Care Services via email at ocfs.sm.childcarebusinesstaxcredit@ocfs.ny.gov