Effective January 1, 2026, the One Big Beautiful Bill Act increases the employer-provided childcare credit to 40% of childcare costs with a maximum credit of $500,000, up from $150,000. Eligible small businesses get an even higher 50% rate and a $600,000 cap.
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OBBBA raises employer childcare tax credit to 40% and $500K cap in 2026
Why this matters for founders
If you offer or are considering childcare benefits, the credit now covers a far larger share: small employers can claim 50% of qualifying costs, so model the after-credit cost before your 2026 benefits planning.
Source: Carr, Riggs & Ingram
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