What's Happening?
Starting in 2026, Louisiana will implement the Workforce Child Care Tax Credit, a new initiative aimed at improving access to quality child care for employees. This program, part of Act 454 passed during
the 2025 Regular Legislative Session, focuses on workforce development and child care solutions. The tax credit will allow businesses to double their maximum allowable expenses for child care from $50,000 to $100,000 per tax year. Additionally, businesses can contribute up to $10,000 per child per year toward eligible child care, an increase from the previous $5,000. Companies can also claim up to $100,000 annually for purchasing or reserving child care slots at eligible facilities. The credit is designed to support high-quality child care providers, with increased tax credit amounts for businesses whose employees' children are enrolled in top-rated programs.
Why It's Important?
The introduction of the Workforce Child Care Tax Credit addresses significant barriers to employment for working families in Louisiana. Reliable child care is crucial for workforce participation and productivity, and the lack of it costs employers approximately $762 million annually. The economic impact extends further, contributing to an estimated $1.3 billion loss each year due to reduced workforce participation and consumer spending. By facilitating better access to child care, the tax credit aims to transform employee satisfaction and business efficiency, ultimately promoting economic growth in the state.
What's Next?
Businesses will be eligible to claim the credit on their 2027 tax returns. For the 2026 tax year, the total available tax credit will initially be $1 million, with potential growth to $5 million in subsequent years based on utilization rates. Applications for credits will be processed on a first-come, first-served basis starting in 2027, making it crucial for businesses to apply early. This initiative signifies Louisiana's commitment to creating a family-friendly environment that supports economic development.
