What changed
The maximum employer-provided childcare credit rises from $150,000 to $500,000 for 2026, or $600,000 if the employer is an eligible small business.
Employer Childcare Credit (45F) Expanded for 2026 | HelloBooks The employer-provided childcare credit cap rises to $500,000, or $600,000 for eligible small businesses, from 2026. Which employer clients should look again.
Business returns · employer credits
The employer childcare credit (45F) gets a much higher cap
Few small employers used the childcare credit because the cap was low relative to the cost of a facility or contracted care. From 2026 the ceiling more than triples, with a higher figure for eligible small businesses.
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Maximum credit from 2026
$500,000
- Eligible small business
- $600,000
- Previous maximum
- $150,000
- Starts
- Tax year 2026
Applies: Tax year 2026 onwardFrom IRS.gov · checked October 10, 2026
Which clients to raise it with
Employers with shift workers, healthcare practices and manufacturers struggling to hire are the natural audience. The question to ask is whether the client already pays for childcare in any form, such as reserved slots at a local provider, because those costs may support a claim.
Track the costs from day one
Set up a dedicated expense account for childcare facility and provider costs before the first invoice is paid. A credit claimed on costs that sit in general benefits or rent is hard to defend later.
FAQ
Frequently asked questions
- When does the higher 45F cap start?
- For 2026. The IRS lists it among the tax year 2026 changes in IR-2025-103.
Related
Keep exploring
US tax changes for 2025 and 2026
The plain-English summary for business owners
The paid family and medical leave credit is permanent and wider
Business returns · employer credits
Tax return changes for small employers
By client type · small employers
Dependent care FSA limit: $7,500 for 2026
Families · dependent care
Sources
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
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