Wisconsin Proposal would Give Tax Breaks to Businesses that Help their Workers Afford Child Care

A proposal from Republican lawmakers would offer state tax breaks to Wisconsin businesses that help their employees afford child care. The refundable tax credits would apply to businesses that start their own day cares for workers, as well as to those who help employees pay for outside providers.

During a public hearing this week, Sen. Dan Feyen, R-Fond Du Lac, said the legislation is one way to increase participation in Wisconsin’s workforce. “Wisconsin is facing rising costs and reduced capacity in our day care industry,” said Feyen, a co-sponsor of the proposal. “This is putting incredible strain on working families (and) putting parents in a position of choosing between dual incomes or sending kids to a day care.”

The bill includes a credit of up $100,000 to help a business with the start-up costs of creating its own day care program for the children of employees. A business could use that credit for capital expenses, such as playground equipment or lease or mortgage payments. A business could also use that credit to pay an outside nonprofit to establish a day care program.

It would be on top of a proposed credit of up to $3,000 per child to cover the operating and administrative costs of an employee’s child care. Those payments could be made either to a business’ in-house day care or to an outside provider, but the employer would only be eligible for the additional per-child credit if the employer covers at least half of the employee’s child care costs.

That requirement for a matching contribution will ensure an employer has “sufficient skin in the game,” said Rep. David Armstrong, R-Rice Lake, who introduced the legislation. While Armstrong acknowledged the bill is “not a magic bullet,” he said he hopes it will encourage employers to be “more aggressive” in responding to their workers’ child care needs.

If the bill becomes law, Wisconsin would join 19 other states that offer similar types of child care tax credits to employers.

The Wisconsin proposal would be more expansive than a federal tax credit that already applies to employers that provide or help pay for child care, according to an analysis from Wisconsin’s Department of Revenue.