HB1435
To Amend The Law Concerning Income Tax Credits For Child Care; To Amend The Income Tax Credit For Employer-provided Child Care; To Provide An Income Tax Credit For Licensed Childcare Providers; And To Declare An Emergency.
Last Action (May 5, 2025): Died in House Committee at Sine Die adjournment.
Sponsors
AI-Generated Summary
House Bill 1435 seeks to modify and expand income tax credits related to childcare services in Arkansas. It repeals previous employer-provided childcare tax credit statutes and establishes a new, comprehensive framework for employer-provided childcare tax credits, capping total annual credits for employers at $15 million. This new structure includes eligible expenses such as facility construction, renovation, payments for employee childcare, and contributions to dependent care assistance programs. Additionally, the bill creates a new income tax credit for licensed childcare providers based on the number of eligible children enrolled, capped at $5 million annually. It also mandates that the Division of Child Care and Early Childhood Education provide clear information on licensing and available financial assistance on its website. The bill includes an emergency clause to ensure immediate implementation.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are businesses that provide childcare assistance to their employees, particularly small businesses and those located in rural areas which receive reserved portions of the tax credits. Licensed childcare providers also benefit directly through a new per-child tax credit designed to offset operational costs. Additionally, working parents may indirectly benefit if these tax incentives encourage employers to expand childcare benefits or lead to an increase in the availability and affordability of licensed childcare slots.
Who Might Suffer?
The bill could be viewed as negatively impacting the state’s general fund due to the reduction in tax revenue resulting from the $20 million in aggregate annual tax credits ($15 million for employers and $5 million for providers). Furthermore, childcare providers that do not meet licensure requirements or businesses that do not fit the specific criteria for 'eligible expenses' or 'small business/rural' definitions may feel at a competitive disadvantage compared to those that qualify for the new tax subsidies.
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