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SB 256

Income tax; providing credit for certain employer child care expenditures; providing refundability credit for qualified child care worker. Effective date.

2026 Regular Session Introduced by Suzanne Schreiber and 1 co-sponsor

Oklahoma offers a 30% nonrefundable employer credit for qualifying child care expenses and up to $1,000 refundable credit per qualified child care worker, with annual caps and carr

Second Reading referred to Revenue and Taxation Committee then to Appropriations Committee
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WeVote Research Nonpartisan
Bill Summary · SB 256

Overview

SB 256 (Oklahoma, 2026) proposes income tax credits aimed at incentivizing employer investment in child care. The bill creates a nonrefundable credit for certain employer child care expenditures and a refundable credit for qualified child care workers. It sets monetary limits, annual adjustments, and carryover provisions, with an effective date of November 1, 2025.

Purpose and Intent

  • Encourage employers to support or provide child care for employees’ dependents.
  • Improve access to licensed child care facilities for workers.
  • Support qualified child care workers through an additional refundable credit.
  • Manage the program with annual dollar limits and a phased ramp of credits through 2030 and beyond.

Key Provisions

Definitions (Section 1)

  • “Child” = five years old or younger.
  • “Child care expense” = costs or tuition for services at a licensed child care facility.
  • “Employer” = any sole proprietor or legally recognized business entity.
  • “Licensed child care facility” = properly licensed and enrolled in QRIS (Quality Rating and Improvement System).
  • “Qualified child care worker” = employee who:
    • works 8+ consecutive months in the calendar year for the tax year,
    • performs classroom services at a licensed facility,
    • is enrolled in Oklahoma’s Professional Development Ladder (PDL),
    • has earned ≥12 credit hours.

Employer Credit (Section 1B)

For tax years 2026–2030, employers may claim a credit against Oklahoma corporate/individual income tax equal to 30% of:
- (a) Employee child care expenses paid by the employer;
- (b) Operating or contracting costs to operate a child care facility primarily for the employer’s (or group of employers’) employees, minus amounts paid by employees for these services;
- (c) Costs to contract with a child care facility to reserve slots for its employees.

Qualified Child Care Worker Credit (Section 1C)

  • For tax years 2026–2030, a refundable credit of up to $1,000 is available for each qualified child care worker.

Credit Limits and Rules (Sections 1D–1G)

  • Employer credit total cap: $30,000 per tax year.
  • The employer credit cannot reduce tax liability below zero.
  • Excess credits may be carried forward for up to five subsequent tax years.
  • Beginning in 2028, annual total credits are capped and adjusted to respect two separate annual caps:
    • An initial annual limit of $5,000,000 (with annual percentage-based reductions to meet the cap).
    • A separate annual limit of $14,000,000 (also with annual percentage-based reductions to meet the cap).
  • If credits exceed the annual limit, excess credits are allowed but factored into future adjustments.

Administrative and Effective Details

  • Provisions trigger Tax Commission computations to publish the required reduction percentages to stay within annual caps.
  • The act is codified to become effective November 1, 2025, with phased implementation through 2030 and thereafter.

Affected Parties

  • Employers eligible to claim the nonrefundable 30% credit for qualifying child care expenditures.
  • Licensed child care facilities that enroll in QRIS and serve employees’ dependents.
  • Qualified child care workers who meet the eligibility criteria (employment length, PD ladder enrollment, and credit-hour threshold).
  • Oklahoma taxpayers with tax liabilities who may utilize these credits within the stated annual caps and carryforward rules.

Timelines and Program Mechanics

  • Effective date: November 1, 2025.
  • Applicable tax years: 2026–2030 (initial phase for both employer and worker credits).
  • Carryforward: Unused employer credits can be carried forward up to five years.
  • Annual caps and adjustments: Starting in 2028, credits are limited by two annual caps ($5M and $14M), with an adjustment formula tied to prior-year claims to ensure total credits do not exceed the cap.
  • Refundability: The worker credit is refundable; the employer credit is nonrefundable.

Notable Considerations

  • The program relies on the Oklahoma Tax Commission to publish annual adjustment percentages to stay within caps, which introduces a dynamic, year-by-year element to the amount of credit that may be claimed.
  • The dual caps and carryforward create a multi-year planning horizon for employers seeking to maximize benefits.
  • The requirement that child care facilities be in QRIS emphasizes quality standards linked to the credit program.

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

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