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HB 1435

TO AMEND THE LAW CONCERNING INCOME TAX CREDITS FOR CHILD CARE; TO AMEND THE INCOME TAX CREDIT FOR EMPLOYER-PROVIDED CHILD CARE; TO PROVIDE AN INCOME TAX CREDIT FOR LICENSED CHILDCARE PROVIDERS; AND TO DECLARE AN EMERGENCY.

2025 Regular Session Introduced by Brandon Achor and 13 co-sponsors

HB 1435 aimed to enhance child care support in Arkansas by offering tax credits to employers and licensed providers, boosting access and affordability for families.

Died in House Committee at Sine Die adjournment.
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WeVote Research Nonpartisan
Bill Summary · HB 1435

Summary of House Bill 1435 (HB 1435)

Purpose and Intent

House Bill 1435 (HB 1435) aimed to amend existing laws concerning income tax credits related to child care in Arkansas. The bill sought to:
- Restructure the income tax credit for employer-provided child care.
- Introduce a new income tax credit for licensed child care providers.
- Address the growing need for child care support in the workforce.

Key Provisions

Income Tax Credit for Employer-Provided Child Care

  • Replacement of Current Credit: The bill proposed to replace the existing employer-provided child care tax credit with a non-refundable credit based on actual expenses incurred by the employer.
  • Eligible Expenses: Employers could claim credits for:
    • Construction, renovation, expansion, or repair of child care facilities.
    • Payments to licensed child care facilities for services provided to employees.
    • Reservations of child care services for employees.
    • 50% of contributions made towards dependent care assistance programs, capped at $2,500 per employee.
  • Credit Limits:
    • Maximum credit of $500,000 per taxpayer per tax year.
    • Aggregate limit of $15 million for all employers per calendar year, with $3.75 million reserved for rural employers or small businesses.

Income Tax Credit for Licensed Child Care Providers

  • New Credit Introduction: A non-refundable income tax credit for licensed child care facilities was established.
  • Credit Calculation: The credit would be calculated as $1,500 multiplied by the average monthly number of eligible children enrolled, capped at $25,000 per taxpayer per tax year.
  • Aggregate Limit: Total credits for all child care facilities would not exceed $5 million annually, with $1.125 million reserved for facilities in smaller cities (population of 25,000 or less).

Administrative Requirements

  • The Department of Finance and Administration (DFA) was tasked with creating forms and processes for claiming these credits.
  • Tax-exempt entities could sell their earned tax credits.

Impact

  • Fiscal Impact: The bill was projected to reduce general revenue by $20 million in FY2026 due to the implementation of these tax credits.
  • Taxpayer Impact: Employers investing in child care facilities could receive significant tax credits, potentially enhancing employee retention and satisfaction. Licensed child care providers could also benefit financially, encouraging the growth of child care services.

Procedural Aspects

  • Effective Date: The provisions of HB 1435 were set to take effect for tax years beginning on or after January 1, 2026.
  • Legislative Status: The bill was introduced on February 7, 2025, and underwent several amendments before ultimately dying in the House Committee at sine die adjournment on May 5, 2025.

Conclusion

While HB 1435 proposed significant changes to support child care through tax credits, it ultimately did not advance through the legislative process. The bill reflected ongoing efforts to address child care accessibility and affordability for both employers and providers in Arkansas.

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

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