Child Care Tax Credits from Missouri Passes House

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Missouri residents may soon benefit from a series of credits that will make child care more affordable and accessible. A new bill offering child care tax credits from Missouri has recently been approved by the House. The bill includes three acts covering tax credits for taxpayers, employers and child care providers. 

Child care tax credits from Missouri: what’s the need?

Last week, the House approved the bill offering child care tax credits by a 113-39 vote. Although many Republicans supported the credits, all votes against the bill were from GOP legislators. The legislation was sponsored by Rep. Brenda Shields (R-St. Joseph).

Missouri has long been grappling with the child care crisis. A study by the U.S. Chamber of Commerce Foundation estimated that the state lost about $1.35 billion last year because there weren’t enough workers.

Shields cited the same study, saying the lack of accessible and quality child care forced many parents to change or leave their workplace. Also, Shields noted that there is only one available opening for every three children in the state requiring child care.

“Over 60% of our businesses said that they have trouble with retaining and recruiting employees to work in their business,” Shields said. “This is our first step. It might not fix it all, but we’ll go from there.”

Gov. Mike Parson also highlighted the need for child care legislation in his State of the State address. Also, the governor proposed an investment of $52 million in a state child care subsidy program.

“Today, we have the capacity to serve just 39% of Missouri children in licensed facilities,” Gov. Parson said. “It’s time for change.”

What does the legislation include?

Shields’ legislation uses a three-pronged approach to address the child care issues in the state. The three credits, if approved, would expire at the end of 2030. The three credits that are part of Shields’ legislation are:

Child Care Contribution Tax Credit – this credit provides donors to child care providers a credit of up to 75% of their donation (up to $200,000). The provider must use the donation to promote child care, including improving facilities, staff salaries or training.

Employer Provided Child Care Assistance – this credit aims to develop partnerships between businesses whose employees need child care and providers. A business with two or more employees providing child care assistance will qualify for a credit of up to 30% of those contributions (up to $200,000).

Child Care Providers Tax Credit – this credit allows child care providers to claim a credit equaling the provider’s employer withholding tax. Also, it allows providers to claim a tax credit of up to 30% of the provider’s eligible capital expenditures.

Though Shields’ bill offering child care tax credits from Missouri is making progress in the House, there are concerns that it may get stalled in a divided Senate.