What is the Childcare Facility Tax Credit?
The Childcare Facility Tax Credit (Act 2024-303) is a state incentive for Alabama childcare providers who own and operate a qualified facility. It takes effect January 1, 2025, and runs through December 31, 2027, unless extended. The Alabama Department of Revenue administers the credit; email incentives@revenue.alabama.gov with eligibility questions.
To qualify, the facility must be an eligible for-profit entity licensed by the Alabama Department of Human Resources (DHR) and enrolled in the Alabama Quality STARS program. Eligible children are those age five or younger who participate in the Childcare Subsidy Program. The credit is claimed in the tax year the facility's STARS rating is in effect and eligible children are enrolled.
A qualifying provider can receive up to $25,000 per year. The credit is refundable but cannot be carried forward. It may be applied against Alabama income tax, the state portion of the financial institution excise tax, the insurance premium tax, or the Utility License Tax (for utilities).
Pass-through entities may allocate the credit to owners on a pro rata basis; the credit cannot otherwise be transferred. Taxpayers must first reserve the credit through My Alabama Taxes and then submit a credit claim with documentation at year end, only those with a reservation may claim the credit.
To qualify, the facility must be an eligible for-profit entity licensed by the Alabama Department of Human Resources (DHR) and enrolled in the Alabama Quality STARS program. Eligible children are those age five or younger who participate in the Childcare Subsidy Program. The credit is claimed in the tax year the facility's STARS rating is in effect and eligible children are enrolled.
A qualifying provider can receive up to $25,000 per year. The credit is refundable but cannot be carried forward. It may be applied against Alabama income tax, the state portion of the financial institution excise tax, the insurance premium tax, or the Utility License Tax (for utilities).
Pass-through entities may allocate the credit to owners on a pro rata basis; the credit cannot otherwise be transferred. Taxpayers must first reserve the credit through My Alabama Taxes and then submit a credit claim with documentation at year end, only those with a reservation may claim the credit.
