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SB 2867

Income tax credit; revise for employers providing dependent child care or child care stipends.

2026 Regular Session

Mississippi SB 2867 provides a 50% tax credit for employers' dependent care costs up to $3,000 per child per year, with stipends requiring at least $2,000 per child and strict cert

Approved by Governor
#finance #waysandmeans
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WeVote Research Nonpartisan
Bill Summary · SB 2867

Summary of Mississippi SB 2867 (Session 2026)

Purpose and intent

  • The bill revises Mississippi’s income tax credit for employers that assist with employee dependent care.
  • It modifies eligibility, amounts, administration, and annual caps to incentivize employer-provided dependent care or child care stipends for employees.

Key provisions and changes

Income tax credit framework

  • Eligible employers: Those providing dependent care for employees during work hours or offering a child care stipend to employees for use with licensed/registered child care providers or equivalent entities.
  • Credit amount: 50% of eligible dependent care expenses.
  • Per-child cap: The credit cannot exceed $3,000 per year for each child of a participating employee (down from unspecified higher amounts in prior versions; the bill sets this cap explicitly at $3,000 per child per year).

Child care stipends

  • Stipend threshold: A child care stipend must be at least $2,000 per child to qualify for the credit when paid directly to a licensed/registered entity or similar provider in Mississippi.
  • Certification requirements: Employers must certify to the Department of Revenue (DOR) details including:
    • Names of employees receiving stipends
    • Amount of each stipend per employee
    • The receiving licensed/registered entity (including entity’s federal ID and state license/registration numbers)
    • Additional information as required by DOR to ensure compliance (e.g., ensuring stipends fund licensed/registered care in-state)

Eligible uses of the credit

  • If the employer contracts with a provider, the credit applies to:
    • Net cost of such contracts for dependent care services (or to expenses if the employer directly provides dependent care, including staff, materials, equipment, and facility maintenance)
    • If stipends are used, the credit applies to the stipend amount
    • Additional eligible expenses that improve quality, availability, and affordability of dependent care in the community during work hours
  • Deductions: No deduction may be taken for expenses that are the basis for the credit.
  • Limitation: Credits can be claimed only by the qualifying business entity; they cannot be transferred or claimed by unrelated entities.

Carryover and rebates

  • Carryforward: If credits exceed tax liability, they may be carried forward up to five years. Any excess after five years is neither refundable nor carried forward.
  • Optional rebate: Taxpayers may elect to receive a rebate instead of a credit. The rebate is 75% of what would be eligible for the credit.
  • Rebate administration: Rebates are issued via vouchers by the DOR and paid within 12 months of voucher issuance. Rebates are funded from current tax collections.

Aggregate annual limits

  • Per-taxpayer cap: The maximum combined credits and rebates a taxpayer can use in a single tax year is $50,000.
  • Statewide cap: The total amount of tax credits and rebates awarded under this section is capped at $5,000,000 for any one taxable year.
  • Facility eligibility: Eligible facilities must be licensed or registered by:
    • Mississippi Department of Health for programs serving children age 12 or younger and programs serving elderly adults
    • Department of Revenue for programs serving dependents older than 12
  • Enrollment/age requirements: The facility must serve the relevant population within the licensure framework or be approved under a USDA child/adult nutrition program for family child care settings serving five or fewer children and/or adults.

Effective date

  • The act takes effect January 1, 2026.

Affected parties

  • Employers in Mississippi providing dependent care or child care stipends for employees
  • Employees who receive qualifying dependent care benefits (direct care or stipends)
  • Licensed or registered child care providers and other eligible entities receiving stipends
  • Mississippi Department of Revenue (administration of credits, certification, rebates)
  • State Department of Health for facility licensure/registration verification

Procedural and timeline notes

  • The bill is already enacted by the legislature and signed into law (with governor actions noted: approved April 8, 2026; enrolled and signed in early April 2026; effective January 1, 2026).
  • Annual fiscal cap: $5,000,000 in aggregate credits/rebates per tax year; individual taxpayers cannot exceed $50,000 in credits/rebates per year.

Practical impact considerations

  • Employers may find it financially advantageous to offer either direct dependent care services or stipends, given a 50% credit on eligible costs (up to $3,000 per child per year).
  • The $2,000 stipend threshold and the need for direct payments to licensed/registered providers ensure usage aligns with regulated childcare, potentially improving quality and accessibility.
  • The rebate option provides an alternative path for taxpayers unable to use the credit due to tax liability limits, though rebates are limited to 75% of eligible credit value.

Overall, SB 2867 expands and tightens the existing employer-based dependent care tax incentive, formalizing certification, capping benefits, and encouraging direct provider payments within Mississippi.

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

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