HB1019
To Create The Affordable Childcare Act Of 2025; To Create An Income Tax Credit For Employers Who Assist Employees With Childcare Costs; And To Replace The Existing Income Tax Credit For Employer-operated Childcare Facilities.
AI-Generated Summary
This bill, titled the "Affordable Childcare Act of 2025," proposes to create a new income tax credit for businesses in Arkansas that assist their employees with childcare costs. The bill outlines specific percentages of expenses that businesses can claim as a credit, including 30% of amounts paid for childcare services or for locating childcare, 50% for establishing and operating an employer-operated childcare facility, and 50% for payments to organizations providing access to childcare. There are limitations on the total credit a business can receive, set at $30,000 for some credit types and $45,000 for others per tax year. Any excess credit that exceeds a business's tax liability will be refunded. Crucially, this bill repeals two existing sections of Arkansas Code that provided income tax credits for employer-provided childcare, specifically those related to employer-operated childcare facilities and certain gross receipts tax qualifications. The new provisions and repeals are effective for tax years beginning on or after January 1, 2025. The bill aims to incentivize employers to support their employees' childcare needs.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be employers in Arkansas that choose to provide or assist with childcare for their employees. This includes businesses that pay for third-party childcare services, help employees find childcare, establish their own childcare facilities, or contract with organizations that offer childcare access. Employees of these businesses would also indirectly benefit through potentially more affordable or accessible childcare options. Childcare providers, such as licensed facilities and organizations that facilitate childcare access, could also see increased business if employers utilize the tax credits to engage their services.
Who Might Suffer?
The entities most directly negatively impacted by this bill are those that currently benefit from the repealed income tax credits for employer-provided childcare. Specifically, businesses that previously qualified for and utilized the income tax credits under Arkansas Code §§ 26-51-507 and 26-51-508 would lose those existing tax benefits. This could include businesses that operate their own childcare facilities or participate in joint childcare programs under the former provisions. While the bill introduces new credit opportunities, businesses heavily reliant on the now-repealed tax structures may experience a negative financial shift if they do not or cannot take advantage of the new credit provisions.