RELATING TO LONG DURATION CLEAN ENERGY STORAGE.

2025 Regular Session Introduced by Nadine Nakamura

The Affordable Childcare Act of 2025 aimed to offer tax credits to businesses for childcare support, easing costs for working families and enhancing employee satisfaction.

Carried over to 2026 Regular Session.

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Purpose and Intent

House Bill 1019, titled the Affordable Childcare Act of 2025, aimed to provide financial incentives for businesses to assist employees with childcare costs. The bill proposed a new refundable income tax credit for employers who either pay for childcare services or establish childcare facilities for their employees' dependent children. The intent was to alleviate the financial burden of childcare on working families and encourage businesses to support their workforce.

Key Provisions

The bill included several significant provisions:

New Income Tax Credit:

Employers could receive a refundable income tax credit for childcare-related expenses, structured as follows:
- 30% of the amount spent on purchasing childcare services for employees' dependents (up to $30,000 per tax year).
- 50% of the costs incurred in establishing and operating a new childcare facility (up to $45,000 in the year of establishment).
- 30% of the operational costs of a childcare facility in subsequent years, minus any revenues received (up to $30,000).
- 50% of payments made to organizations that provide access to childcare services (up to $45,000).

Repeal of Existing Credit:

The bill proposed to repeal the existing income tax credit for employer-operated childcare facilities, which was previously set at 3.9% of the annual salary of employees providing childcare services or a flat $5,000 credit for the first year of operation.

Effective Date:

The provisions of the bill were set to take effect for tax years beginning on or after January 1, 2025.

Impact

Businesses: The bill was designed to benefit businesses that support their employees with childcare, potentially leading to increased employee satisfaction and retention.

Employees: Working families would have had access to more affordable childcare options, easing the financial strain associated with childcare costs.

Fiscal Impact: The estimated fiscal impact for the state was a $14.7 million reduction in general revenue for FY2026, based on projected claims for the new tax credits.

Procedural Aspects

Introduced: November 20, 2024

Legislative Actions:

The bill was read and referred to the House Committee on Revenue & Taxation.
An amendment was adopted on January 16, 2025, before the bill was reported correctly engrossed.
Ultimately, the bill died in the House Committee at sine die adjournment on May 5, 2025.

Conclusion

While HB 1019 aimed to enhance childcare support for employees through tax incentives for businesses, it did not progress past the committee stage. The proposed changes could have had a significant impact on both employers and employees in Arkansas, promoting a more supportive work environment for families.

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