Child care assist./B&O tax

AN ACT Relating to supporting employers providing child care 1
assistance to employees by establishing a business and occupation and 2
public utility tax credit; adding a new section to chapter 82.04 RCW; 3
adding a new section to chapter 82.16 RCW; creating new sections; and 4
providing expiration dates. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
NEW SECTION. Sec. 1. (1) The legislature finds that the lack of 7
affordable child care is a primary barrier to workforce 8
participation, particularly for employees of small and mid-sized 9
businesses.10
(2) The legislature recognizes that while large corporations 11
often have the resources to provide on-site child care, small 12
businesses are at a competitive disadvantage. 13
(3) Therefore, it is the intent of this act to establish a five-14
year pilot program to incentivize employer-supported child care. The 15
legislature intends to cap the total fiscal impact of this tax credit 16
program to ensure budget stability while explicitly authorizing and 17
encouraging small businesses to pool their resources through child 18
care consortiums. 19
H-2595.1
HOUSE BILL 2187
State of Washington 69th Legislature 2026 Regular Session
By Representatives Penner, Eslick, Schmidt, Dufault, Jacobsen,
Mendoza, Graham, Couture, and Schmick
Prefiled 12/23/25. Read first time 01/12/26. Referred to Committee
on Finance.
p. 1 HB 2187
NEW SECTION. Sec. 2. A new section is added to chapter 82.04 1
RCW to read as follows: 2
(1) Beginning January 1, 2027, a person is allowed a credit 3
against the tax imposed in this chapter equal to 50 percent of the 4
amount paid by the employer to a registered child care provider or 5
child care facility for the care of a dependent or dependents of one 6
or more employees. 7
(a) During calendar years 2027 and 2028, credit eligibility is 8
limited to: 9
(i) Employers with fewer than 100 full-time equivalent employees; 10
or 11
(ii) Employers participating in a child care consortium as 12
defined in subsection (10) of this section. 13
(b) Beginning January 1, 2029, credit eligibility is open to any 14
qualifying person. 15
(2) The credit claimed may not exceed the tax that would 16
otherwise be due under this chapter. Refunds may not be granted in 17
place of credits. Any amount of credit earned under this section not 18
claimed by the person in one calendar year may be carried forward for 19
no more than one calendar year immediately following the year that 20
the credit was earned. 21
(3) For persons part of a child care consortium, the tax credit 22
must be claimed by a member of the consortium based on the member's 23
specific financial contribution to the consortium's total cost of 24
child care assistance, subject to the individual cap in subsection 25
(4) of this section. 26
(4) The total credit amount approved by this section may not 27
exceed $50,000 for each person claiming the credit in a calendar 28
year. 29
(5) The total amount of credits authorized under this section may 30
not exceed an annual statewide limit of $5,000,000 per calendar year. 31
Credits must be authorized on a first-in-time basis. The department 32
must publish a notice on its website when the cap is reached.33
(6) No application is necessary for the tax credit. The person 34
must keep records necessary for the department to verify eligibility 35
under this section. 36
(7) To claim a credit under this section, a person must 37
electronically file with the department all returns, forms, and other 38
information the department requires in an electronic format as 39
provided and approved by the department. Any return, form, or 40
p. 2 HB 2187
information required to be filed in electronic format under this 1
section is not filed until received by the department in an 2
electronic format. For purposes of this subsection, "returns" has the 3
same meaning as "return" in RCW 82.32.050. 4
(8) No person may claim a credit against taxes due under both 5
this chapter and chapter 82.16 RCW for the same child care assistance 6
costs. 7
(9) No credit may be claimed under this section after January 1, 8
2032. 9
(10) For the purpose of this section, "child care consortium" 10
means: 11
(a) Two or more employers that form a child care partnership in 12
order to pool monetary resources to purchase child care services or 13
to contract for slots at a licensed child care facility for the 14
benefit of their employees; or 15
(b) A local chamber of commerce, downtown association, or 16
economic development council acting as a lead for a partnership of 17
employers that form a child care partnership in order to pool 18
monetary resources to purchase child care services or to contract for 19
slots at a licensed child care facility for the benefit of their 20
employees. 21
(11) This section expires January 1, 2033. 22
NEW SECTION. Sec. 3. A new section is added to chapter 82.16 23
RCW to read as follows: 24
(1) Beginning January 1, 2027, a person is allowed a credit 25
against the tax imposed in this chapter equal to 50 percent of the 26
amount paid by the employer to a registered child care provider or 27
child care facility for the care of a dependent or dependents of one 28
or more employees. 29
(a) During calendar years 2027 and 2028, credit eligibility is 30
limited to: 31
(i) Employers with fewer than 100 full-time equivalent employees; 32
or 33
(ii) Employers participating in a child care consortium as 34
defined in subsection (10) of this section. 35
(b) Beginning January 1, 2029, credit eligibility is open to any 36
qualifying person. 37
(2) The credit claimed may not exceed the tax that would 38
otherwise be due under this chapter. Refunds may not be granted in 39
p. 3 HB 2187
place of credits. Any amount of credit earned under this section not 1
claimed by the person in one calendar year may be carried forward for 2
no more than one calendar year immediately following the year that 3
the credit was earned. 4
(3) For persons part of a child care consortium, the tax credit 5
must be claimed by a member of the consortium based on the member's 6
specific financial contribution to the consortium's total cost of 7
child care assistance, subject to the individual cap in subsection 8
(4) of this section. 9
(4) The total credit amount approved by this section may not 10
exceed $50,000 for each person claiming the credit in a calendar 11
year. 12
(5) The total amount of credits authorized under this section may 13
not exceed an annual statewide limit of $5,000,000 per calendar year. 14
Credits must be authorized on a first-in-time basis. The department 15
must publish a notice on its website when the cap is reached.16
(6) No application is necessary for the tax credit. The person 17
must keep records necessary for the department to verify eligibility 18
under this section. 19
(7) To claim a credit under this section, a person must 20
electronically file with the department all returns, forms, and other 21
information the department requires in an electronic format as 22
provided and approved by the department. Any return, form, or 23
information required to be filed in electronic format under this 24
section is not filed until received by the department in an 25
electronic format. For purposes of this subsection, "returns" has the 26
same meaning as "return" in RCW 82.32.050. 27
(8) No person may claim a credit against taxes due under both 28
this chapter and chapter 82.04 RCW for the same child care assistance 29
costs. 30
(9) No credit may be claimed under this section after January 1, 31
2032. 32
(10) For the purpose of this section, "child care consortium" 33
means: 34
(a) Two or more employers that form a child care partnership in 35
order to pool monetary resources to purchase child care services or 36
to contract for slots at a licensed child care facility for the 37
benefit of their employees; or 38
(b) A local chamber of commerce, downtown association, or 39
economic development council acting as a lead for a partnership of 40
p. 4 HB 2187
employers that form a child care partnership in order to pool 1
monetary resources to purchase child care services or to contract for 2
slots at a licensed child care facility for the benefit of their 3
employees. 4
(11) This section expires January 1, 2033. 5
NEW SECTION. Sec. 4. (1) This section is the tax preference 6
performance statement for the tax preferences contained in sections 1 7
and 2, chapter . . ., Laws of 2026 (sections 1 and 2 of this act). 8
This performance statement is only intended to be used for subsequent 9
evaluation of the tax preferences. It is not intended to create a 10
private right of action by any party or to be used to determine 11
eligibility for preferential tax treatment.12
(2) The legislature categorizes these tax preferences as ones 13
intended to induce certain designated behavior by taxpayers, as 14
indicated in RCW 82.32.808(2)(a), and to provide tax relief for 15
certain businesses or individuals, as indicated in RCW 16
82.32.808(2)(e). 17
(3) It is the legislature's specific public policy objective to 18
provide reduced tax liability for businesses that provide child care 19
for their employees. 20
(4) If a review finds that the total number of child care slots 21
supported by employers claiming the credit in this act has increased 22
year-over-year during the first two years of the credit's existence, 23
then the legislature intends to extend the expiration date of the tax 24
preferences. 25
(5) In order to obtain the data necessary to perform the review 26
in subsection (4) of this section, the joint legislative audit and 27
review committee may refer to any data collected by the state.28
--- END ---
p. 5 HB 2187