Nebraska is offering child care tax credits for parents, providers. Here's what to know (2024)

LINCOLN — A new Nebraska tax credit program can help working parents with young children pay the rising cost of child care.

Related credits can benefit child care workers and child care programs, as well as the businesses and organizations that bolster Nebraska’s child care options.

But first, those parents, providers and others have to apply for the credits through the Nebraska Department of Revenue. A campaign launched Tuesday aims to spread the word about the new income tax credits and the application process.

State Sen. Eliot Bostar of Lincoln, who introduced the legislation creating the credits, said he doesn’t want a repeat of the state’s experience offering income tax credits for property taxes paid. Only about half of those credits were claimed by property tax payers before the program was replaced this summer.

He joined Bryan Slone, president of the Nebraska Chamber of Commerce and Industry, and leaders of First Five Nebraska, a nonprofit organization focused on early childhood years, to promote the new credits.

“The importance of child care for Nebraska cannot be overstated,” Bostar said, adding that child care makes it possible for more people to hold jobs and contribute to the state’s economy.

Slone said that having available and affordable child care is key to attracting and keeping young families in the state, as well as maximizing the number of people who can fill jobs in a labor-short state. He said child care concerns consistently rank among the top three concerns Nebraska business owners have.

“This is one of the most important things we have to do in the state,” he said.

About 74% of Nebraska children under age 6 have all available parents in the workforce, yet the state does not have enough child care capacity to meet those needs, according to First Five. Since 2019, licensed child care programs have declined by 12% statewide.

Elizabeth Everett, deputy director of First Five, said the hope is that the new tax credit programs will make a difference. She said the organization will be studying the impact as the credits roll out.

These are the available child care tax credits

Under legislation passed last year, Nebraska will offer four tax credits for people to claim when they filed their 2024 income taxes.

Parents of children age 5 or younger may qualify for refundable income tax credits. Those with household incomes of $75,000 or less can get a $2,000 credit per child in child care. Those with incomes between $75,000 and $150,000 can get a $1,000 credit per child in care. Special provisions apply for parents with incomes below the federal poverty level.

To qualify, parents have to apply using applications from the state Revenue Department. The applications will not be available until later this year. But parents who delay submitting the application could miss out. The Legislature allocated a maximum of $15 million for the parent credits, enough to help 15,000 children at most.

Businesses and others who contribute to helping improve the availability of child care may qualify for nonrefundable credits, worth either 75% or 100% of their donation. Applications for these credits already are available from the Revenue Department. As of Aug. 8, $422,525 of the $2.5 million allocated for the credits has been reserved.

Other credits are available for child care programs that participate in Nebraska’s Step Up to Quality program and serve children on subsidies and for child care professionals who work in a Step Up to Quality program and have completed 12 hours of in-service training. The credit amounts vary and will be approved until the total for both programs reaches $7.5 million.