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Bill

HB 804

Enact the Childcare Tax Credit Act

136th Legislature (2025-2026) Introduced by Sean Brennan and 12 co-sponsors

Creates a refundable Ohio childcare tax credit (5747.74) for families up to 750% of the federal poverty line to offset qualifying child care expenses.

Referred to committee
#childcare #healthandhumanservices #taxation
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Bill Summary · HB 804

Overview

  • Bill: HB 804
  • Session/Jurisdiction: 136th Ohio General Assembly, Ohio
  • Title: Enact the Childcare Tax Credit Act
  • Purpose: Establish a refundable Ohio income tax credit to offset eligible child care expenses for qualifying families. Introduces a new section 5747.74 and repeals existing related provisions (5747.08 and 5747.98) as part of the framework for administering the credit and other tax credits.

Main purpose and intent

  • Create a refundable "Childcare Tax Credit" to help working families with the cost of preschool care.
  • Target population: Taxpayers with household income at or below 750% of the federal poverty line.
  • The credit is designed to reduce or, if applicable, fully refund the taxpayer’s aggregate tax liability, subject to annual caps and income-based percentage rules.

Key provisions and changes

Establishment and scope

  • Enacts new Section 5747.74: defines eligible scenarios, eligibility thresholds, and calculation mechanics for the childcare credit.
  • Repeals and replaces related Ohio tax credit administration provisions (Sections 5747.08 and 5747.98) to incorporate the new credit into the refund/credit ordering framework and administration.

Eligible expenses and rules (Section 5747.74)

  • Eligible expenses: Any amount that would qualify as an employment-related child care expense under federal tax law (IRS Section 21), paid for the care of a qualifying child, with no absolute cap tied to federal limits for eligibility (subject to Ohio-specific rules in this act).
  • Qualifying child: A dependent under age five.
  • Household income measurement: Largely aligned with federal poverty line calculations, using modified adjusted gross income (MAGI) plus other family members to determine poverty-based eligibility.

Credit amount and refundability (Section 5747.74)

  • Availability: For taxpayers with household income equal to or less than 750% of the federal poverty line.
  • Calculation: A refundable credit equal to the eligible child care expenses, subject to annual limits described below.
  • Ordering and information: Credit claimed in the sequence established by the state tax credit ordering rules (5747.98). Taxpayers may be required to provide information to substantiate claims.

Annual family cap and credit table (Section 5747.74(C))

  • Total family cap: Capped at the product of:
    • $2,000 per qualifying child for families with one qualifying child; or
    • $4,000 for families with two or more qualifying children, multiplied by a percentage based on household income relative to the federal poverty line.
  • Credit percentage schedule by income tier:
    • 1) Federal poverty line: 100% of eligible expenses
    • 2) 550% or below: 100%
    • 3) 551%–600%: 81.25%
    • 4) 601%–650%: 62.50%
    • 5) 651%–700%: 43.75%
    • 6) 701%–750%: 25%
  • Excess: If the credit exceeds the taxpayer’s total tax due after prior credits, the excess is refundable.

Interaction with other credits (Section 5747.74(C))

  • Taxpayers cannot claim the existing child care expense credit (5747.054) for the same taxable year if they claim the new childcare credit (5747.74).

Administrative and related provisions (Sections 5747.08 and 5747.98)

  • The act reorganizes how credits are applied in the overall tax liability calculation, specifying a fixed order for applying credits, and clarifying treatment for pass-through entities and joint vs. separate filing requirements.
  • The act preserves the ability for certain refundable credits to be claimed by pass-through entities and their investors, with the usual limitations and election rules (including single-return elections for pass-through entities, as applicable, and the corresponding investor credits).

Effective date

  • The new childcare credit applies to taxable years beginning on or after January 1, 2027.

Who is affected

  • Ohio individual taxpayers with dependents under age five and household incomes up to 750% of the federal poverty line.
  • Families with qualifying child care expenses seeking a refundable tax credit to offset state income tax liability.
  • Pass-through entities and their investors may interact with the credit through the established filing and election mechanics, consistent with other credits in Section 5747.08 and 5747.98 (as amended).

Procedural and timeline aspects

  • Repeals of existing provisions (5747.08 and 5747.98) and enactment of 5747.74 align administrative procedures to accommodate the new credit.
  • Effective for tax years beginning January 1, 2027 and later.
  • Filing requirements and credit ordering are governed by the revised framework, with potential information requests to substantiate claims.

Summary

HB 804 introduces a refundable Ohio childcare tax credit (5747.74) aimed at reducing the cost burden of early-childcare for eligible families. It sets income-based eligibility up to 750% of the federal poverty line, defines eligible expenses and a per-family cap tied to the number of qualifying children, and prescribes a tiered credit percentage. The bill integrates the new credit into Ohio’s overall credit ordering system, repeals two existing provisions, and sets a 2027 effective date for the credit.

Compiled from official sources — confirm details with the bill’s official record.

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