<p class=ldtitle>A BILL to amend and reenact § 58.1-439.4 of the Code of Virginia, relating to child day-care facility investment and child day-care expense reimbursement tax credits.</p>
Summary
HB1412 amends Virginia’s child day-care tax credit statute to expand and extend tax incentives for employers that help create or support child care for employees. The bill preserves the existing credit for investments in establishing a licensed child day-care facility, but makes it available again for taxable years beginning on and after January 1, 2027, and raises the maximum credit from $25,000 to $50,000. It also adds a new, separate credit for employers that pay or reimburse eligible child day-care expenses for employees’ dependent children, equal to 25 percent of those costs, up to $50,000 per taxpayer per year.
The bill also revises the administrative framework for the credit program. It requires Tax Commissioner approval of applications, keeps the carryforward rules for unused credits, and limits taxpayers to either the facility-investment credit or the expense-reimbursement credit in the same taxable year, not both. The measure directs the Tax Commissioner to issue implementing guidelines and exempts those guidelines from the Administrative Process Act. The bill applies to taxable years beginning on and after January 1, 2027.
Impact
If enacted, HB1412 would amend § 58.1-439.4 of the Code of Virginia to broaden the state’s child care-related business tax incentives and increase the fiscal exposure of the credit program. It would create a new credit for employer-paid or employer-reimbursed child day-care expenses, restore and enlarge the facility investment credit for future tax years, and raise the annual cap on approved credits from an assumed $100,000 to $5 million in the approval-allocation provision. The bill would affect taxpayers subject to Virginia individual and corporate income taxes, especially employers seeking to recruit or retain workers by subsidizing child care access.
Sentiment
The available voting history suggests limited support in subcommittee, with a 7-3 recommendation to lay the bill on the table, and the bill ultimately left in Finance. That indicates the proposal did not advance and likely faced skepticism about the size, structure, or fiscal impact of the credit expansion. No committee transcript is available, so the public record here shows procedural resistance more than affirmative endorsement.
Contention
The main points of contention appear to be the cost and scope of the expanded tax credits. The bill increases the per-taxpayer cap, creates a new reimbursement credit, and raises the annual statewide allocation assumption substantially, which may have raised concerns about revenue loss and program administration. Another likely issue is whether the credits would effectively target child care access or instead provide a broad tax benefit to employers, especially given the requirement that the Tax Commissioner approve applications in order received and the limitation that taxpayers cannot claim both credits in the same year.