H.R. 8023: To amend the Internal Revenue Code of 1986 to provide a credit for increasing wages paid to child care providers.

This bill proposes to amend the Internal Revenue Code of 1986 to create a tax credit aimed at increasing wages for child care providers. Here’s a breakdown of the key components:

Child Care Supply Credit

The new section introduced in the tax code is referred to as the "Child Care Supply Credit." It is designed to provide financial incentives for employers to raise the wages of child care workers.

Calculation of the Credit

The credit amount available to an employer for any taxable year will be determined based on the following conditions:

• The lesser of:
  • A percentage of the qualified child care wages paid by the employer during the taxable year.
  • The increase in qualified child care wages from the previous year.

Requirements for the Credit

To qualify for the credit, an employer must meet certain conditions:

• The average hourly wage for child care workers must be higher than the average wage paid in the previous year.
• Qualified wages are defined as those paid to “qualified child care workers” employed in eligible child care facilities.

Applicable Percentage of the Credit

The standard percentage to calculate the credit is set at:

• 5% for most employers.
• 7% for child care facilities located in rural areas.

Definitions

Several terms are defined to clarify who and what qualifies for the credit:

• Qualified Child Care Wages: Wages paid to qualified child care workers.
• Qualified Child Care Worker: Any employee working at an eligible child care facility providing child care services.
• Eligible Child Care Facility: A facility that serves at least six individuals and complies with applicable laws and is compensated for its services.
• Child Care Services: Includes care, education, protection, supervision, or guidance for children.

Election Not to Apply the Credit

Employers have the option to choose not to apply this credit for any taxable year if they prefer.

Treatment of the Credit

The bill specifies that the child care supply credit will be included as part of the general business credits available to employers.

Regulations Around Double Benefits

To prevent employers from receiving multiple tax benefits for the same wages paid, the bill establishes rules that disallow such double benefits.

Effective Date

The provisions of this bill, if enacted, would apply to taxable years beginning after the date of enactment.

Relevant Companies

• None found