Missouri Passes House Child Care Tax Credit

Missourians will soon receive a series of credits that will make child care more affordable and accessible. A new bill providing Missouri’s child care tax credit was recently approved in the House of Representatives. The bill includes three bills that address tax credits for taxpayers, employers and child care providers.

Missouri’s Child Care Tax Credit: What Do You Need?

Last week, the House voted 113 to 39 to approve a bill providing a child care tax credit. Although many Republicans supported the bill, all of the votes against the bill were from Republicans. The bill is sponsored by Rep. Brenda Shields (R-St. Joseph).

Missouri has long grappled with a child care crisis. Staffing shortages cost states an estimated $1.35 billion last year, according to a study by the U.S. Chamber of Commerce Foundation.

Citing the same study, Shields said the lack of accessible, quality child care has led many parents to change jobs or leave. Shields also pointed out that the state only has one vacancy for every three children in need of child care.

“More than 60% of our businesses say they are having trouble retaining and recruiting employees,” Shields said. “This is our first step. “It may not work out everything, but we’ll go from there.”

Governor Mike Parson also emphasized the need for child care legislation in his State of the State address. The Governor also proposed investing $52 million in the state’s child care subsidy program.

“Currently, we only have the capacity to serve 39% of Missouri’s children in licensed facilities,” said Governor Parson. “It is time for change.”

What does the bill include?

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

Childcare Contribution Tax Credit – This credit provides child care providers with a credit of up to 75% of their contribution (up to $200,000). Providers must use donations to promote child care, including facility improvements, staff salaries or training.

Employer-provided child care assistance – This credit aims to develop partnerships between service providers and businesses that require child care for their employees. Businesses with two or more employees who provide child care assistance can deduct up to 30% of their contributions (up to $200,000).

Childcare Provider Tax Credit – This deduction allows child care providers to claim a deduction equal to the provider’s employer withholding tax. It also allows providers to claim a tax deduction of up to 30% on the provider’s qualified capital expenditure.

Shields’ bill, which would provide Missouri’s child care tax credit, is making progress in the House, but there are concerns it could stall in the divided Senate.