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16
59-7-627
59-10-1048
63N-1a-308
59-7-627
59-10-1048
63N-1a-308
10
0
Child Care Business Tax Credit
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jason E. Thompson
Senate Sponsor: Heidi Balderree
Cosponsor:
Doug Fiefia
Carol S. Moss
John Arthur
Jake Fitisemanu
Hoang Nguyen
Melissa G. Ballard
Jon Hawkins
Clinton D. Okerlund
Jefferson S. Burton
Sahara Hayes
Derrin R. Owens
Tyler Clancy
Sandra Hollins
Karen M. Peterson
Paul A. Cutler
Colin W. Jack
Candice B. Pierucci
Jennifer Dailey-Provost
Matt MacPherson
Angela Romero
Ariel Defay
Ashlee Matthews
Andrew Stoddard
Rosalba Dominguez
Verona Mauga
Jordan D. Teuscher
James A. Dunnigan
Tracy J. Miller
Joseph Elison
Grant Amjad Miller
LONG TITLE
General Description:
This bill modifies income tax credits for employer-provided child care.
Highlighted Provisions:
This bill:
defines terms;
expands the nonrefundable corporate and individual income tax credit for
employer-provided child care to apply to off-site child care facilities;
disqualifies an employer from receiving the tax credit if the employer charges or deducts
pay from employees for child care services;
increases the tax credit amount for certain small business employers, in relation to the
employer's child care expenditures;
repeals the requirement for an employer to have claimed the tax credit for construction
expenditures in order to claim the tax credit for child care expenditures;
requires the Governor's Office of Economic Opportunity to develop and maintain a
webpage for employers to obtain information and resources regarding the tax credits; and
makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
59-7-627
Effective
05/06/26
Applies beginning
01/01/26
, as enacted by Laws of Utah
2025, Chapter 407
59-10-1048
Effective
05/06/26
Applies beginning
01/01/26
, as enacted by Laws of
Utah 2025, Chapter 407
ENACTS:
63N-1a-308
Effective
05/06/26
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
59-7-627
is amended to read:
59-7-627
Effective
05/06/26
Applies beginning
01/01/26
. Nonrefundable tax
credits for employer-provided child care.
(1)
As used in this section:
(a)
"Eligible small business" means the same as that term is defined in Section 45F,
Internal Revenue Code.
(b)
"Off-site qualified child care facility" means a qualified child care facility that an
employer does not own, control, operate, or manage.
(c)
"On-site qualified child care facility" means a qualified child care facility that an
employer owns, controls, operates, or manages, for the benefit of the employer's
employees.
(a)
(d)
(i)
"Qualified child care expenditure" means an amount
paid or incurred
an
employer pays or incurs
for
:
(A)
the operating costs of
a
an on-site
qualified child care facility
of the
employer
, whether the employer operates the
on-site
qualified child care
facility or contracts with a third party provider to provide child care services at
the
on-site
qualified child care facility
.
;
(B)
entering into a contract with an off-site qualified child care facility to provide
child care services for the employer's employees; or
(C)
entering into a contract with an intermediate entity that contracts with one or
more off-site qualified child care facilities to provide child care services for the
employer's employees.
(ii)
"Qualified
For an employer that operates an on-site qualified child care facility,
"qualified
child care expenditure" includes costs related to training employees and
providing increased compensation to employees with higher levels of child care
training.
(b)
(e)
"Qualified child care facility" means center based child care as that term is
defined in Section
26B-2-401
that is located in the state.
(c)
(f)
"Qualified construction expenditure" means an amount
paid or incurred
an
employer pays or incurs
to acquire, construct, rehabilitate, or expand property:
(i)
for
a
an on-site
qualified child care facility
of the employer
; and
(ii)
with respect to which the employer is allowed a deduction for depreciation, or
amortization in lieu of depreciation.
(d)
(g)
"Qualifying taxpayer" means a taxpayer that:
(i)
is an employer;
and
(ii)
qualifies for and claims the federal employer-provided child care tax credit
described in Section 45F, Internal Revenue Code, for the current taxable year
.
;
and
(iii)
does not obtain payment from an employee or deduct from an employee's salary
or wages for child care services, with respect to any qualified child care facility
for which the taxpayer claims a tax credit under this section.
(e)
(h)
"Recapture event" means an employer fails to operate
a
an on-site
qualified
child care facility for which the employer claims a tax credit under
this section
Subsection
(2)
as a child care facility for at least five consecutive taxable years after
the taxable year on which the employer first claims a tax credit under
this section
Subsection
(2)
.
(f)
(i)
"Third party provider" means:
(i)
a new child care provider; or
(ii)
an existing child care provider that can perform the contract without reducing the
provider's existing child care services.
(2)
(a)
A qualifying taxpayer may claim a nonrefundable tax credit equal to 20% of the
qualified construction expenditures the qualifying taxpayer incurred during the
taxable year.
(b)
A qualifying taxpayer may carry forward, to the next five taxable years, the amount
of the qualifying taxpayer's tax credit described in this Subsection
(2)
that exceeds
the qualifying taxpayer's income tax liability for the taxable year.
(3)
(a)
(i)
Subject to Subsection
(3)(a)(ii)
, a
A
qualifying taxpayer may claim a
nonrefundable tax credit equal to
:
(i)
30% of the qualified child care expenditures the qualifying taxpayer incurred
during the taxable year, for a qualifying taxpayer that qualifies as an eligible small
business for the taxable year; or
(ii)
10% of the qualified child care expenditures the qualifying taxpayer incurred
during the taxable year
, for a qualifying taxpayer that does not qualify as an
eligible small business for the taxable year
.
(ii)
A qualifying taxpayer may claim a tax credit under this Subsection
(3)
for
qualified child care expenditures only if the qualifying taxpayer claims a tax credit
under Subsection
(2)
for the current taxable year or a previous taxable year.
(b)
A qualifying taxpayer may not carry forward or carry back the tax credit described in
this Subsection
(3)
that exceeds the qualifying taxpayer's income tax liability for the
taxable year.
(4)
(a)
(i)
If a recapture event happens within two taxable years after the first taxable
year in which the qualifying taxpayer claims a tax credit under this section, a
qualifying taxpayer shall repay 100% of the tax credit a qualifying taxpayer
receives under this section for any taxable year.
(ii)
If a recapture event happens more than two taxable years but fewer than three
taxable years after the first taxable year in which the qualifying taxpayer claims a
tax credit under this section, a qualifying taxpayer shall repay 75% of the tax
credit a qualifying taxpayer receives under this section for any taxable year.
(iii)
If a recapture event happens more than three taxable years but fewer than four
taxable years after the first taxable year in which the qualifying taxpayer claims a
tax credit under this section, a qualifying taxpayer shall repay 50% of the tax
credit a qualifying taxpayer receives under this section for any taxable year.
(iv)
If a recapture event happens more than four taxable years but fewer than five
taxable years after the first taxable year in which the qualifying taxpayer claims a
tax credit under this section, a qualifying taxpayer shall repay 25% of the tax
credit a qualifying taxpayer receives under this section for any taxable year.
(b)
A qualifying taxpayer shall make a payment for a recapture event for the taxable year
in which the recapture event occurs.
Section 2. Section
59-10-1048
is amended to read:
59-10-1048
Effective
05/06/26
Applies beginning
01/01/26
. Nonrefundable tax
credits for employer-provider child care.
(1)
As used in this section:
(a)
"Eligible small business" means the same as that term is defined in Section 45F,
Internal Revenue Code.
(a)
(b)
"Qualified child care expenditure" means the same as that term is defined in
Section
59-7-627
.
(b)
(c)
"Qualified child care facility" means the same as that term is defined in Section
59-7-627
.
(c)
(d)
"Qualified construction expenditure" means the same as that term is defined in
Section
59-7-627
.
(d)
(e)
"Qualifying claimant" means a claimant, estate, or trust that:
(i)
is an employer;
and
(ii)
qualifies for and claims the federal employer-provided child care tax credit
described in Section 45F, Internal Revenue Code, for the current taxable year
.
;
and
(iii)
does not obtain payment from an employee or deduct from an employee's salary
or wages for child care services, with respect to any qualified child care facility
for which the claimant, estate, or trust claims a tax credit under this section.
(e)
(f)
"Recapture event" means the same as that term is defined in Section
59-7-627
.
(f)
(g)
"Third party provider" means the same as that term is defined in Section
59-7-627
.
(2)
(a)
A qualifying claimant may claim a nonrefundable tax credit equal to 20% of the
qualified construction expenditures the qualifying claimant incurred during the
taxable year.
(b)
A qualifying claimant may carry forward, to the next five taxable years, the amount
of the qualifying claimant's tax credit described in this Subsection
(2)
that exceeds
the qualifying claimant's income tax liability for the taxable year.
(3)
(a)
(i)
Subject to Subsection
(3)(a)(ii)
, a
A
qualifying claimant may claim a
nonrefundable tax credit equal to
:
(i)
30% of the qualified child care expenditures the qualifying claimant incurred
during the taxable year, for a qualifying claimant that qualifies as an eligible small
business for the taxable year; or
(ii)
10% of the qualified child care expenditures the qualifying claimant incurred
during the taxable year
, for a qualifying claimant that does not qualify as an
eligible small business for the taxable year
.
(ii)
A qualifying claimant may claim a tax credit under this Subsection (3) for
qualified child care expenditures only if the qualifying claimant claims a tax credit
under Subsection (2) for the current taxable year or a previous taxable year.
(b)
A qualifying claimant may not carry forward or carry back the tax credit described in
this Subsection
(3)
that exceeds the qualifying claimant's income tax liability for the
taxable year.
(4)
(a)
(i)
If a recapture event happens within two taxable years after the first taxable
year in which the qualifying claimant claims a tax credit under this section, a
qualifying claimant shall repay 100% of the tax credit a qualifying claimant
receives under this section for any taxable year.
(ii)
If a recapture event happens more than two taxable years but fewer than three
taxable years after the first taxable year in which the qualifying claimant claims a
tax credit under this section, a qualifying claimant shall repay 75% of the tax
credit a qualifying claimant receives under this section for any taxable year.
(iii)
If a recapture event happens more than three taxable years but fewer than four
taxable years after the first taxable year in which the qualifying claimant claims a
tax credit under this section, a qualifying claimant shall repay 50% of the tax
credit a qualifying claimant receives under this section for any taxable year.
(iv)
If a recapture event happens more than four taxable years but fewer than five
taxable years after the first taxable year in which the qualifying claimant claims a
tax credit under this section, a qualifying claimant shall repay 25% of the tax
credit a qualifying claimant receives under this section for any taxable year.
(b)
A qualifying claimant shall make a payment for a recapture event for the taxable year
in which the recapture event occurs.
Section 3. Section
63N-1a-308
is enacted to read:
63N-1a-308
Effective
05/06/26
. Office to maintain webpage for employers
regarding employer-provided child care tax credits.
(1)
For purposes of this section, "employer-provided child care tax credits" means the
nonrefundable income tax credits available to employers under Sections
59-7-627
and
59-10-1048
.
(2)
The office shall develop and maintain a webpage on the office's public website through
which employers may obtain information and resources regarding the
employer-provided child care tax credits.
(3)
The webpage described in Subsection
(2)
shall:
(a)
provide a simple and easy-to-understand overview of the employer-provided child
care tax credits, including the eligibility requirements and an explanation as to how
the state's employer-provided child care tax credits relates to the federal
employer-provided child care tax credit under Section 45F, Internal Revenue Code;
(b)
provide instructions to employers for how to claim an employer-provided child care
tax credit, including:
(i)
a description of applicable filing deadlines;
(ii)
links for accessing any necessary forms or documentation; and
(iii)
contact information for relevant state or federal agencies, intermediaries, and
other stakeholders that may be able to assist employers with claiming a tax credit;
(c)
provides examples of the various ways in which an employer may qualify to receive
an employer-provided child care tax credit; and
(d)
includes any other information the office determines will increase employer
awareness and the effectiveness of the employer-provided child care tax credits.
(4)
The office may coordinate with the State Tax Commission and any other relevant
agencies in developing and maintaining the webpage required by this section.
Section 4.
Effective Date.
This bill takes effect on
May 6, 2026
.
Section 5.
Retrospective operation.
(1)
Except as provided in Subsection (2), this bill has retrospective operation to January 1,
2026.
(2)
Section 63N-1a-308 (Effective 05/06/26) has no retrospective operation.
3-6-26 11:25 AM