With the passage and signing of HB 2237 in mid-2022, all Kansas businesses can now apply to receive a state income tax credit for helping their employees cover child care costs or if the business helps provide child care itself. This program has existed since 1993, but the Kansas Child Day Care Assistance Tax Credit has only been available to large corporations and financial institutions for the last decade.
The changes to the tax credit took effect on July 1, 2022, and Kansas businesses can apply to deduct from their state income taxes a portion of the child care expenses they incurred – such as providing child care for employees or helping employees pay for other child care – going back to January 2021. The tax credit amounts are:
- 30% of the total amount spent by an organization to help an employee pay for child care. The credit for this qualifying expense is capped at $30,000.
- 30% of the total amount spent by an organization to help employees locate child care. For example, contributions to a child care resource and referral agency such as Child Start, The Family Conservancy, Child Care Aware of Eastern Kansas, and Child Care Aware of Kansas. The credit for this qualifying expense would be capped at $30,000.
- 30% of the total amount spent operating a child care facility primarily used by dependents of the organization's employees, after excluding the amount of money received to provide child care services (i.e. tuition from parents). The credit for this qualifying expense would be capped at $30,000.
- 50% of the total amount spent establishing a child care facility primarily used by dependents of the organization's employees (i.e. employer-based or onsite child care). The credit would be capped at $45,000.
- 50% of the total amount spent establishing and operating a child care facility in conjunction with other businesses/organizations primarily used by dependents of the organization's employees. The credit would be capped at $45,000.
To claim the credit, a business must complete Schedule K-56, which is filed with the income tax return. With only $3 million available to be claimed each year, businesses receive the credit on a first-come, first-served basis when they file their tax returns in the spring. (Note: Kansas Action for Children is not a state agency and cannot provide tax advice. Please consult a tax professional with questions about your specific situation.)
With the average cost of child care per kid — specifically infant care — in Kansas at $680 per month in a home care environment and $1,259 per month in a center, parents need help. This expanded tax credit to all businesses begins to level the playing field so small businesses can attract and retain employees, parents can cover the costs of child care, and children can remain in stable, nurturing environments.
Other Actions Employers Can Take to Address the Child Care Crisis
There are some concrete things businesses can do to address child care challenges for their workers:
- Offer a flexible work schedule; allow time for family issues and let parents work when they will be most productive.
- Offer a consistent, predictable work schedule. Even if there were plenty of child care slots, workers with unpredictable work schedules can’t access them.
- Institute an infants-at-work policy – it’s a low-cost solution.
- Provide dependent care flexible spending accounts; an FSA is an excellent way for parents to save for child care.
- Consider workplace-provided child care options, including onsite child care or child care partnerships.
- Offer paid parental leave following the birth or adoption of a child. Workers are more likely to remain in a job if they can stay home with their children in the early months of life.
Kids are Good Business: Before trying any of these recommendations, make sure they meet the needs of your staff. You can ask them using the Kids Are Good Business Survey at familyfriendlyks.org. You will learn what your own staff members think about child care and other workplace supports