Fort Worth Approves Tax Break for Child Care Facilities

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Child care facilities in Fort Worth, Texas will now qualify for a full property tax break. The City Council has approved the new tax break for Child Care facilities that will be applied toward 100% of a facility’s appraised value. The child care facilities are expected to pass on the savings to families.

Tax break for child care facilities: who will get it?

On Tuesday, the Fort Worth City Council unanimously approved the tax break for child care facilities. The new tax break follows Proposition 2, which was approved by almost 65% of Texas voters in November to allow local governments to offer tax relief to those struggling financially.  

To qualify for the new tax break, qualifying child care facilities must be part of the Texas Rising Star program and have at least 20% of its children receiving subsidized services through the Texas Workforce Commission.

Texas Rising Star is the state’s rating and improvement system for early childhood programs. Also, for a property to qualify, it must be used exclusively to offer educational and developmental services.

It is estimated that 54 child care centers in Fort Worth will qualify for the new tax break out of 338. Eligible child care providers can save more than $3,600 with the new tax break. The tax break would be effective on the provider’s 2024 tax bill.

The benefit would be available to both property owners and child care directors renting their property. It must be noted that the child care home on a property that already claims a homestead exemption won’t be eligible for the child care exemption.

Moreover, if only part of a property is used for a child care facility, the exemption would be available only on the part used for child care. The program doesn’t allow dual exemptions with residential homesteads.

How the savings can be used by child care providers

Property owners who lease their property to childcare providers are required to transfer the savings to the providers.

“Those that are going to qualify are … going to pass (savings) through a lesser electric bill burden or being able to pay their teachers $1 or $2 more an hour,” Mayor Mattie Parker said.

It will be up to the childcare facilities to decide how they plan to use the savings from the new tax break. Some facilities may use the savings to reduce tuition fees, while some may use it to offer more wages or better facilities.

With the new tax break, Fort Worth joins the growing list of cities – Dallas County, Travis County, Houston and San Antonio – offering a similar tax break to child care providers. Fort Worth is estimated to lose about $200,000 in revenue due to the new break. The revenue loss will be a small percentage of the city’s billion-dollar annual budget.

Fort Worth, in recent years, has made several policy changes to improve the availability of child care. The city used millions of dollars in federal COVID-19 recovery funds to provide new childcare facilities.