What's Happening?
Louisiana has launched a new Workforce Child Care Tax Credit as part of Act 454 from the 2025 Regular Legislative Session. This initiative aims to enhance access to high-quality child care for employees by providing businesses with a tax incentive. The
credit modernizes an existing program and aligns with the state's workforce development goals. It allows businesses to claim up to $100,000 per tax year for child care-related expenses, doubling the previous limit. The credit also increases the maximum allowable payments for child care facilities on behalf of employees from $5,000 to $10,000 per child annually. Additionally, companies can claim up to $100,000 per year for reserving child care slots for employees' children. The tax credit is applicable for investments made in 2026, with credits available on tax returns starting in 2027. The overall tax credit is capped at $1 million for the current tax year, with potential growth up to $5 million in subsequent years, contingent on demand.
Why It's Important?
The introduction of the Workforce Child Care Tax Credit is significant as it addresses a critical barrier to employment for many families: access to reliable and affordable child care. By incentivizing businesses to invest in child care solutions, the initiative aims to enhance employee retention and attract new talent, contributing to a healthier workforce. The economic impact of inadequate child care is substantial, with workforce disruptions costing Louisiana employers approximately $762 million annually. The new tax credit is expected to reduce these disruptions, thereby benefiting both businesses and the broader economy. Furthermore, the initiative supports early childhood education, which is crucial for children's development and future success. By improving child care availability, the state aims to increase workforce participation, productivity, and educational outcomes, ultimately enhancing Louisiana's competitiveness and appeal as a family-friendly state.
What's Next?
Businesses interested in the Workforce Child Care Tax Credit should prepare to submit their applications as early as possible in 2027, as approvals will be granted on a first-come, first-served basis. The Louisiana Department of Revenue provides comprehensive information through its Workforce Child Care Tax Credits Bulletin #25-029. As the program progresses, it will be important to monitor its impact on workforce participation and economic growth. Stakeholders, including advocacy groups like Better Louisiana, will likely continue to push for policies that support educational and workforce development. The success of this initiative could serve as a model for other states looking to address similar challenges.
