What Is the Employer-Provided Child Care Credit (45F) in 2026?

The employer-provided child care credit under Internal Revenue Code section 45F is a general business credit for employers that pay qualified child care or child care resource and referral costs for their employees.

40%For those amounts, the credit equals 40% of qualified child care expenditures, or 50% if you are an eligible small business, plus a smaller percentage of qualified child care resource and referral expenditures.
50%For those amounts, the credit equals 40% of qualified child care expenditures, or 50% if you are an eligible small business, plus a smaller percentage of qualified child care resource and referral expenditures.
$500,000The credit for any tax year cannot exceed $500,000, or $600,000 for an eligible small business.
$600,000The credit for any tax year cannot exceed $500,000, or $600,000 for an eligible small business.

The employer-provided child care credit (Internal Revenue Code section 45F) rewards employers that help employees with child care. Public Law 119-21 expanded the credit for amounts paid or incurred after December 31, 2025. For those amounts, the credit equals 40% of qualified child care expenditures, or 50% if you are an eligible small business, plus a smaller percentage of qualified child care resource and referral expenditures. The credit for any tax year cannot exceed $500,000, or $600,000 for an eligible small business. Those dollar caps are adjusted for inflation for tax years beginning after 2026. You claim the credit on Form 8882, and it flows through the general business credit.

Last checked: November 5, 2026. This page explains the rules only. It is general information, not legal, tax, or financial advice.

The short version

This is a credit for employers, not a credit parents claim on a personal return for their own child care bills.
Qualified child care spending can include building or expanding a child care facility, running one, or contracting with a licensed provider (including through an intermediate entity) for employee care.
Resource and referral spending is a separate, smaller piece of the credit.
Eligible small businesses get the higher percentage and the higher annual cap.
You generally cannot also deduct or credit the same dollars used to figure this credit, and facility basis may be reduced by the credit tied to acquiring or improving the facility.
Part of the credit can be recaptured if a facility stops qualifying within a set period after it is placed in service.

Who qualifies

An employer that paid or incurred qualified child care expenditures or qualified child care resource and referral expenditures for its employees during the tax year.
An eligible small business, for the higher rate and cap, is one that meets the gross receipts test of section 448(c) over the preceding five-year period. The IRS publishes the average annual gross receipts threshold that applies for taxable years beginning in 2026.
A qualified child care facility must meet state and local licensing and other rules, be used mainly for child care (with a limited home-based exception), be open to the employer's employees, avoid favoring highly compensated employees, and meet the employee-dependent enrollment rule if child care is the employer's principal trade or business.
After December 31, 2025, a facility can be jointly owned or operated with others and still count as a qualified facility for the credit.
Amounts to acquire, construct, rehabilitate.
Expand depreciable property used as part of a qualified child care facility (not part of the employer's or an employee's principal residence); operating costs of the employer's qualified facility (including certain training, scholarships.
Extra pay tied to higher child care training).
Amounts under a contract with a qualified facility.
With an intermediate entity that contracts with such facilities.
To provide child care to employees.

How to get it

How to claim

Confirm the costs are for your employees and fit the qualified child care or resource and referral definitions above.
Decide whether you meet the eligible small business gross receipts test, which changes the percentage and the annual cap.
Complete Form 8882, Credit for Employer-Provided Childcare Facilities and Services.
Report the credit on Form 3800 as part of the general business credit (pass-through owners follow the Form 8882 and Form 3800 instructions).
Keep records that show the facility was licensed and open to employees, that benefits did not favor highly compensated employees, and that you reduced basis or avoided double benefits where required.
Watch the recapture rules if you dispose of a facility or it stops operating as a qualified child care facility within the period described in section 45F.

Programs that may match

Look beyond this credit

Compare another employer benefit creditthe small business health care tax credit.See what else Public Law 119-21 changed for small businesses.Browse how to find tax credits and incentives your business may use.Find other programs you may qualify for with FundPlenty's free match at fundplenty.com.

FAQ

What is the employer-provided child care credit in 2026?

It is the section 45F general business credit for employers that pay qualified child care or child care resource and referral costs for employees. For amounts paid or incurred after December 31, 2025, it is 40% of qualified child care expenditures (50% for an eligible small business) plus 10% of qualified resource and referral expenditures, subject to the annual dollar cap.

How much is the 45F credit worth?

The credit cannot exceed $500,000 for a tax year, or $600,000 if you are an eligible small business. Those caps are adjusted for inflation for tax years beginning after 2026. The credit percentage on child care expenditures is 40%, or 50% for an eligible small business, and resource and referral expenditures use a 10% rate.

Who is an eligible small business for 45F?

A business that meets the section 448(c) gross receipts test over the preceding five-year period. For taxable years beginning in 2026, the IRS says a corporation or partnership generally meets that test for this credit if average annual gross receipts over those five years do not exceed $32,000,000.

Do I claim 45F on Form 8882?

Yes. Employers use Form 8882, and the credit is part of the general business credit reported on Form 3800. Some pass-through owners report the credit from a Schedule K-1 without filing Form 8882 themselves; see the form instructions.

Can I also deduct the same child care costs?

Generally no. You may not claim another deduction or credit for the portion of expenditures used to determine this credit, and you must reduce the basis of a facility by the credit tied to acquiring, constructing, rehabilitating, or expanding it.

What if the child care facility closes or changes owners?

You may have to recapture part or all of the credit if, before the 10th tax year after the year the facility was placed in service, it stops operating as a qualified child care facility or ownership changes. A buyer that agrees in writing to assume the recapture liability can prevent immediate recapture on a sale.