New Child Care, School Readiness Tax Credits Available to Lincoln Families

KLIN News

Lincoln families are being urged to take advantage of new Child Care Tax Credits and School Readiness Tax Credits created by the Nebraska legislature last year.

Lincoln State Senator Elliot Bostar spearheaded the legislation, LB 754, which created refundable and nonrefundable tax credits designed to help offset financial pressures on families with young children and child care providers. The credits also give an opportunity for employers and other stakeholders to help grow local child care options that address the workforce needs of employers and communities statewide.

“The importance of childcare to our state really cannot be overstated,” said Bostar. “It’s essential that Nebraskans are aware of these tax credits available to them, both providers and families.”

First Five Nebraska, a policy group focused on advancing early childhood care and learning opportunities, says access to affordable, quality child care is a crucial support for working parents and a key asset to Nebraska’s growing economy.

About 74% of Nebraska children under age 6 have all available parents in the workforce, and licensed child care programs have declined by 12% statewide since 2019, according to First Five.

The new tax credits include:

Child Care Tax Credit-Refundable (CCTC-R): Provides families with young children under age 5 either a $1,000 or $2,000 credit per child depending on the family’s annual household income and other eligibility requirements.
Child Care Tax Credit-Nonrefundable (CCTC-NR): Taxpaying individuals or organizations can apply for a nonrefundable credit equal to either 75% or 100% of a qualifying contribution if the recipient of the contribution operates a child care program in a Nebraska Opportunity Zone or serves children on the Child Care Subsidy.
School Readiness Tax Credit-Refundable (SRTC-R): Offers a refundable tax credit between $2,300 and $3,500 to individual child care staff members or self-employed child care providers (such as licensed Family Child Care Home providers).
School Readiness Tax Credit-Nonrefundable (SRTC-NR): For child care providers, the amount of the credit is determined by the program’s Step Up to Quality rating and the average monthly number of children enrolled in the Nebraska Child Care Subsidy program and served during the tax year, ranging between $400 and $1,200 per child.

These tax credits became available in January of 2024. Taxpayers must apply for both credits, which can be done below.