Unlocking the Employer‑Provided Childcare Credit (Section 45F)

by Nicole Beasley

Working parents and companies both face a major hurdle: childcare. The Employer‑Provided Childcare Credit (IRC § 45F) is a powerful, yet underutilized, incentive designed to address this challenge by helping employers support their workforce.

🧮 What Is It?

Under Section 45F, employers who pay for childcare facilities or support services for employees can receive:

Qualified facility expenditures include costs for acquiring, constructing, rehabilitating, or operating a licensed childcare facility—plus staff training, scholarships, or compensation for childcare professionals .

Resource & referral expenses apply when businesses contract with licensed providers to help employees find childcare—without favoring any employee group .

👥 Who’s Eligible?

Any employer—large or small—who pays or incurs eligible expenses during the tax year qualifies. The childcare facility must:

  1. Comply with local licensing rules

  2. Be primarily for employee use (or at least 30% usage by employee dependents if it's the employer’s main business)

  3. Be non-discriminatory to highly compensated employees irs.gov+15irs.gov+15irs.gov+15

 

💼 Why Employers Should Care

  • Cost-offset: Earn up to $150k/year in tax credits for childcare-related investments taxpayeradvocate.irs.gov+4irs.gov+4irs.gov+4.

  • Talent magnet: Programs from onsite centers to referral services help attract & retain working parents .

  • Productivity + loyalty: Reduced absenteeism, enhanced morale—Patagonia, for example, credits its childcare program with 100 % maternity return and strong ROI

Back to News