Effective January 1, 2026, OBBBA raises the employer-provided childcare credit from 25% to 40% of eligible costs and lifts the annual cap from $150,000 to $500,000. Qualifying small businesses get an even richer version: 50% of costs with a $600,000 annual cap.
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Employer childcare tax credit jumps to 40% of costs, capped at $500,000 for 2026
Why this matters for founders
If you subsidize childcare or are considering a benefit that helps parents on your team, the math is far better in 2026, model the credit before setting your benefits budget.
Source: Carr, Riggs & Ingram
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