SB273 Alabama 2023 Session

Summary

Primary Sponsor

Garlan GudgerSenator

Republican

Session

Regular Session 2023

Title

Relating to child care and workforce development; to establish the employer tax credit and child care provider tax credit; to make legislative findings.

Summary

SB273 creates refundable employer and child care provider tax credits to expand access to high-quality child care in Alabama.

What This Bill Does

It creates two refundable tax credits: an Employer Tax Credit to encourage employers to fund child care for their employees (up to $1,000,000 per employer per year, with a $15,000,000 annual cap across all employers) and a Facility Tax Credit for child care providers (based on facility quality and average eligible children, up to $25,000 per facility per year, with a $5,000,000 annual cap). Credits are paid against applicable taxes, require documentation to the Department of Revenue, and may result in refunds if credits exceed taxes. The program includes rural-area set-asides, rules for pass-through entity ownership, and funds are paid from the Education Trust Fund through the Child Care Tax Credit Account; the act also sets reporting and administrative requirements and a 2024–2028 sunset unless extended.

Who It Affects

• Employers in Alabama may receive a refundable tax credit for eligible child care expenses incurred to support their employees, within annual caps and subject to documentation and admin rules.
• Child care providers operating licensed facilities may receive a facility tax credit based on the facility’s quality rating and the average number of eligible children served, within annual caps and subject to documentation, ownership disclosures for pass-throughs, and refund provisions.

Key Provisions

• Creates two refundable tax credits: an Employer Tax Credit and a Facility Tax Credit.
• Effective for tax years 2024 through 2028, with annual caps of $15,000,000 for all employers and $5,000,000 for all facilities.
• Employer Tax Credit equals the employer’s total eligible expenses for qualifying child care activities, up to $1,000,000 per employer per year.
• Facility Tax Credit equals the average monthly number of eligible children at a facility times a per-child amount based on the facility’s quality rating (ranging from $1,000 to $2,000 per child), up to $25,000 per facility per year.
• Credits are refundable against applicable taxes and may be paid as refunds if the credits exceed taxes owed; credits cannot be carried forward for future years.
• Credits are awarded after verification through standardized certificates and documentation required by the Department of Revenue; pass-through owners must disclose ownership and claim pro-rata shares.
• Rural-area set-asides: at least 25% of employer credits and at least 25% of facility credits reserved for rural employers and rural providers, respectively; awards are prioritized by the order of requests.
• Credits may not be transferred to unrelated taxpayers; refunds are funded from the Education Trust Fund through the Child Care Tax Credit Account, with administration by the Department of Revenue and State Comptroller.
• The Department of Revenue will adopt rules by January 1, 2024 to implement and administer the credits.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation, Childcare incentive tax credit created.