In an effort to make childcare more affordable and accessible and incentivize businesses to assist their employees with childcare, New Jersey state Senator Troy Singleton introduced legislation that would provide tax credits to employers for expenses incurred in the provision of childcare services to their employees.
Access to childcare has become increasingly burdensome nationwide, with cost increases outpacing inflation and a shortage of workers contributing to a lack of sufficient childcare opportunities. According to data from the Economic Policy Institute, New Jersey is the 13th most expensive state in the nation for childcare, with the average annual cost of infant care for one child at $18,155, or $1,513 per month. In the case of a four-year-old, that cost is only marginally lower, at $17,534, or $1,461 per month.
“For many families, childcare has simply become unaffordable, outpacing even the annual cost of college tuition,” said Senator Singleton (D-Burlington). “Not only does this prevent families from saving for a home or their child’s education, it also has the effect of pressuring parents, usually women, to drop out of the workforce and put their careers on hold. By giving employers an additional incentive to provide childcare, parents can continue to work while lowering their costs.”
The bill would provide corporation business and gross income tax credits to employers of up to $100,000 per taxable period for 50 percent of any of the following expenses incurred during that taxable period:
* expenses related to the acquisition, construction, reconstruction, renovation, or other improvements to property that is to be used by the employer, or another person under contract or agreement with the employer, to conduct, maintain, and operate a qualified childcare center primarily for the children of the employer’s employees;
* expenses related to the maintenance and operation of an on-site qualified childcare center of the employer that is used primarily by the employees of the employer;
* expenses that are paid to another person or entity, under contract or agreement with the employer, to provide childcare services to children of employees; and
* payments made to an employed individual to subsidize expenses incurred by the employee for childcare services at a qualified childcare center.
Under the bill, the term “childcare services” would apply only to services provided for the care, supervision, and education of children under the age of 13 that meet state licensing standards.
To be eligible for the credit, an employer would need to submit an application to the Commissioner of Labor and Workforce Development that includes evidence of the employer’s qualified expenses.
Furthermore, the Commissioner would be required to conduct an annual evaluation of the tax credits issued under the legislation to assess their impact on the availability of, and employee satisfaction with, employer-provided childcare, as well as submit a report to the Governor and Legislature including the number of businesses participating, tax credits claimed, and recommendations for improvements.